Fifth Positive Indigenisation List

1. In July 2024, the Ministry of Defence (MoD) has released a 5^th Positive Indigenisation List (PIL) featuring defence items.

1. This initiative aims to enhance self-reliance, reduce imports, and encourage the growth of the domestic defence sector.

Key Highlights

Purpose and Scope:

1. The 5^th PIL includes 346 items focused on promoting self-reliance (Aatmanirbharta) in defence and reducing the reliance on imports by Defence Public Sector Undertakings (DPSUs).
2. These items are to be sourced exclusively from Indian manufacturers, including Micro, Small, and Medium Enterprises (MSMEs) and startups.
3. The list encompasses a variety of strategically significant items, such as Line Replacement Units (LRUs), systems, sub-systems, assemblies, sub-assemblies, spares, components, and raw materials.

Implementation:

1. The list is published on the MoD’s Srijan portal, which acts as a platform for DPSUs and service headquarters (SHQs) to present defence items for indigenisation to private industries.
2. DPSUs, including Hindustan Aeronautics Limited (HAL), Bharat Electronics Ltd (BEL), and Bharat Dynamics Ltd (BDL), have started issuing Expressions of Interest (EoIs) and Requests For Tender or Proposals (RFPs).

Impact:

1. Indigenisation of these items is projected to substitute imports worth over Rs 1,000 crore.
2. This move provides confidence to the domestic defence sector, promoting the development of defence products without facing competition from imports.

Future Goals:

1. The MoD plans to expand the list annually up to 2025, further increasing the number of indigenised items.
2. This gradual approach aims to achieve greater self-reliance in defence production over the long term.

Positive Indigenisation List (PIL) The PIL specifies items that the Indian armed forces must purchase exclusively from domestic manufacturers, whether from the private sector or DPSUs. Introduced in the Defence Acquisition Procedure (DAP) 2020, the list aims to substitute imports with indigenous production of major systems, platforms, weapons, sensors, and munitions. It includes a wide range of items essential for enhancing India's defence capabilities and promoting self-reliance in the defence sector. Progress: The 1st PIL was introduced in August 2020, with subsequent lists bringing the total to 4,666 items. Till date, 2,970 items, with an import substitution value of Rs 3,400 crore, have been indigenised. Over 36,000 defence items have been offered for indigenisation, with more than 12,300 items indigenised in the last three years. Consequently, DPSUs have placed orders with domestic vendors worth Rs 7,570 crore.

Need for Indigenisation of Defence in India

Import Dependency

1. Arms Importation: India remains the world's largest arms importer despite efforts to develop its domestic defence industry.
2. Global Share: From 2019 to 2023, India represented 9.8% of global arms imports, highlighting a strategic vulnerability in its defence procurement.

Strategic Autonomy

1. Reduction of Dependency: Heavy reliance on foreign arms limits India’s strategic autonomy. Indigenisation can reduce dependence on external sources and supports self-reliance in essential defence technologies.
2. National Security: Indigenous production ensures continuous availability of defence equipment during geopolitical tensions and crises, enhancing national security.
3. Political Leverage: A self-sufficient defence industry strengthens India’s position in international negotiations and defence collaborations.

Economic Benefits

1. Job Creation and Innovation: Indigenisation supports the domestic economy by generating employment, encouraging innovation, and driving industrial growth.
2. Foreign Exchange: It reduces the outflow of foreign exchange, aiding in economic stability.
3. Cost-Effectiveness: Producing defence equipment domestically can be more cost-effective in the long term, lowering procurement, maintenance, and logistical costs associated with imports.

Sustainable Development

1. Harmonious Growth: Indigenisation promotes sustainable development by ensuring that the defence industry grows in alignment with national interests and environmental considerations.

Status of Indigenisation in the Defence Sector

1. Rise in Exports

1. Record Exports: In FY 2023-24, defence exports reached a record Rs 21,000 crore, marking a 32% increase from the previous fiscal year.
2. Historical Growth: Over the past decade, defence exports have surged 31 times compared to FY 2013-14.
3. Sector Contribution: The private sector and Defence Public Sector Undertakings (DPSUs) contributed approximately 60% and 40% to this growth, respectively.
4. Policy Support: Growth is driven by policy reforms, 'Ease of Doing Business' initiatives, and digital solutions provided by the Government to enhance defence exports.

2. Achievements: Production includes advanced systems like the 155 mm Artillery Gun 'Dhanush', Light Combat Aircraft 'Tejas', INS Vikrant Aircraft Carrier, and the Advanced Towed Artillery Gun (ATAG) howitzer.
3. Reduction in Import Dependency: Spending on foreign defence procurement has dropped from 46% to 36% in the past four years, reflecting the impact of indigenisation efforts.
4. Growth in Domestic Procurement Share: The share of domestic procurement in total defence procurement has increased from 54% in 2018-19 to 68% in the current year.

1. Out of this, 25% of the defence budget allocated for procurement from private industry.

Initiatives Related to Indigenisation in the Defence Sector

1. Defence Procurement Policy (DPP) 2016

1. Priority for Indigenous Products: DPP 2016 has introduced the "Buy-IDDM" (Indigenous Designed and Manufactured) category, giving it the highest priority.
2. Objective: This policy aims to boost local production capabilities and reduce reliance on imports.

2. Defence Acquisition Procedure (DAP) 2020

1. Aims to support the Atmanirbhar Bharat Abhiyaan in defence manufacturing.
2. Key Features: Priority for indigenous procurement; Reservations for MSMEs and small shipyards; Increased indigenous content; Introduction of new categories to promote 'Make in India'
3. Focus: Encourages the indigenisation of imported spares to improve self-reliance through import substitution.

3. Industrial Licensing: Licensing has been simplified with extended validity, making investment in the defence sector easier.
4. Foreign Direct Investment (FDI): The FDI policy now permits up to 74% foreign investment under the automatic route, encouraging foreign investment in defence manufacturing.
5. Make Procedure

1. The "Make" procedure in DPP promotes the design, development, and manufacturing of indigenous defence equipment.
2. Part of the Make in India initiative, involving both public and private sectors to build local capabilities.

6. Defence Industrial Corridors: Two corridors in Uttar Pradesh and Tamil Nadu aim to attract investments and build a comprehensive defence manufacturing ecosystem.
7. Innovative and Supportive Schemes

1. Mission DefSpace: Initiated to advance space technology for defence applications.
2. Innovations for Defence Excellence (iDEX): Launched in April 2018, it supports innovation by engaging start-ups, MSMEs, and research institutions.
   • The 'iDEX Prime' framework, introduced in 2022, provides up to Rs 10 crore in grants for high-end solutions.
3. SRIJAN Portal: Facilitates indigenisation by listing 19,500 previously imported items for local production, with 4,000 items attracting interest from the Indian industry.

8. Research and Development (R&D): 25% of the R&D budget is allocated for industry-led R&D, promoting technological advancement and innovation in the defence sector.