Defense production surpasses ₹1 lakh crore thanks to crucial reforms

India announced on Friday that the value of defense production in the country has been exceeded The amount has been estimated at 1 lakh crore for the first time thanks to important reforms to boost growth in this sector, which has huge potential.

The value of defense production by state-owned companies and the private sector has almost doubled in the last five years. The government has taken a number of measures to reduce the country’s dependence on military imports and strengthen its position as an exporter of weapons and systems, officials with knowledge of the matter said, asking not to be named.

The figure stood there 1,06,800 crore in FY 2022-23 compared to 95,000 crore in FY 2021-22 and 54,951 crore five years ago, officials said.

The value of defense production in fiscal 2022–23 has exceeded Thanks to the Defense Ministry’s consistent efforts, the amount has reached 1 lakh crore for the first time and is expected to increase further after private defense contractors submitted their data, the ministry said in a statement. The value of defense production increased by 12% compared to last year.

India produces a range of weapons and systems including the Tejas (LCA) light attack aircraft, various types of helicopters, warships, tanks, artillery pieces, warships, missiles and a variety of military vehicles. A breakdown of defense production by category was not immediately possible.

India has increased its focus on the defense manufacturing sector over the past five years and has taken several measures to achieve self-sufficiency. These include banning the import of a range of weapons, systems and parts, creating a separate budget for buying locally made military equipment, increasing foreign direct investment from 49% to 74% and improving business operations.

The results are beginning to show, experts said.

The value of defense production was 54,951 crore in 2017–18, 50,499 crore in 2018–19, 63,722 crore in 2019–20, 88,631 crore in 2020-21 and 95,000 crore in 2021-22, according to the Department of Defense.

The government is working with the defense industry and its associations to remove barriers and boost defense production, and several policy reforms have made doing business easier, including integrating micro, small and medium-sized enterprises (MSMEs) and start-ups into the Offer chain, the statement said.

“Because of these policies, the industries, including MSMEs and start-ups, are open-minded in defense design, development and manufacture, and the number of defense licenses issued has increased by almost 200% over the last 7 to 8 years,” the statement said said. These measures have boosted the defense manufacturing ecosystem and created job opportunities, it said.

The increase in defense production also follows the corporatization of the Ordnance Factory Board (OFB), India’s largest manufacturer of weapons and military equipment, in 2021 to increase its efficiency and competitiveness under a long-awaited reform.

India is targeting sales of 1.75,000 lakh crore in defense production by 2024–25. “The steps taken for Atmanirbharta (self-reliance) in defense are beginning to show results and if we continue to advance indigenization at the current pace, we are well on our way to achieving the goal.” 1.75,000 lakh crore in two years,” said Air Marshal Anil Chopra (retd.), director general of the Center for Air Power Studies.

The ministry has announced the value of defense production for the period 2022-23 days after announcing a new list of 928 defense items, including spare units, subsystems, components and spare parts, which will be subject to a phased import ban between December 2023 and December 2029. The list includes items used in combat aircraft, trainer aircraft, warships and various types of ammunition.

This comes after the Department of Defense released three similar positive indigenization lists in December 2021, March 2022 and August 2022. The four lists consist of 4,666 items, of which 2,736 items, with an import substitution value of 2,570 crore, have been indigenized so far.

Components and subsystems in the previous lists include multiple elements for fighter aircraft, Dornier 228 aircraft, multiple systems for submarines, equipment for T-90 and Arjun tanks, BMP-II infantry fighting vehicles, warships, and submarines and anti-tank missiles. These lists aim to indigenize defense assets over the next five to six years.

India is taking a two-pronged approach to achieve indigenization through import bans.

One approach involves banning the import of weapons and systems such as fighter jets, warships, helicopters and artillery pieces, while the other concerns subsystems, spare parts and components that are part of larger weapons platforms.

Under the former, India has released four more lists imposing a phased import ban on 411 different types of weapons and platforms, including light tanks, naval helicopters, artillery pieces, missiles, destroyers, ship-launched cruise missiles and light attack aircraft, light transport aircraft, large-capacity land-attack cruise missiles Range, simple trainer aircraft, airborne early warning and control systems (AEW&C) and multi-barreled rocket launchers.

These lists have been announced in the last three years – in August 2020, May 2021, April 2022 and October 2022. Import substitution of ammunition, which is a recurring requirement, has received a special focus in these lists.

Providing budgets for weapons and systems manufactured in India is one of the most important measures to strengthen self-reliance. Around In comparison, this year’s defense budget allocated 1 lakh crore for domestic procurement 84,598 crores, 70,221 crores and 51,000 crore in the previous three years.

The corporatization of OFB, which used to control 41 arms factories, has boosted defense production. In 2021, it was split into seven state entities, which now manufacture ammunition and explosives, vehicles, weapons and equipment, troop comfort items, optoelectronic equipment, parachutes and ancillary products. These new companies are Advanced Weapons and Equipment India Limited, Troop Comforts Limited, India Optel Limited, Munitions India Limited, Avani Armored Vehicles, Gliders India Limited and Yantra India Limited.

India’s arms imports fell by 11% between 2013-17 and 2018-22, but the country is still the world’s largest importer of military equipment, according to a report by Swedish think tank Stockholm International Peace Research Institute released in March.

The country’s focus is not only on reducing import dependency but also on increasing exports. India exported worth of military hardware 15,920 crore in FY 2022-23, the highest ever and a remarkable tenfold increase from 2016-17 when the figure was just 15,920 crore 1,521 crores.

India currently exports military hardware to around 85 countries, with around 100 firms involved in the exports. These include missiles, artillery pieces, missiles, armored vehicles, offshore patrol vessels, personal protective equipment, various radars, surveillance systems and ammunition. Weapons and systems with export potential include the LCA, various types of helicopters, Astra air-to-air missiles beyond visual range and tanks.

India exports bulletproof jackets to 34 countries including Australia, Japan, Israel and Brazil, ammunition (from 5.56mm to 155mm) to around 10 countries including the United Arab Emirates, Egypt, Indonesia and Thailand, fast interceptor boats to Mauritius, Officials said production would be shifted to the Seychelles and the Maldives, and defense electronics to countries including the US, Britain and France. A breakdown by category was not immediately possible.

Exports were included 4,682 crore in 2017–18, 10,745 crore in 2018–19, 9,115 crore in 2019–20, 8,434 crore in 2020-21 and 12,814 crore in 2021-22, according to the Department of Defense.

India is negotiating with Egypt and Argentina over the possible sale of LCA to their air forces. Egypt has forecast a need of 20 aircraft, while the South American country needs 15 new fighters. Hindustan Aeronautics Limited is also considering exporting the advanced light helicopter Dhruv to the Philippines.

Last year, BrahMos Aerospace and the Philippines signed a contract worth nearly $375 million for the Philippine Marines to purchase three batteries of BrahMos supersonic cruise missiles, and Kalyani Strategic Systems Limited was the first to win an export order worth $155.5 Millions of US dollars for the supply of 155mm artillery pieces Such an order for an Indian company.

India has set an export target for defense equipment 35,000 crore by 2024-25.

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