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Defence Production and Export Promotion Draft 2020

Posted in Defence Production, and DPEPP

This policy document gives a clear indication of what the Govt. is thinking as regards defence production at a macro level and what it intends to communicate to the stakeholders.

A detailed reading of the document Defence Defence Production and Export Promotion Draft 2020 reveals that the Govt. is thinking, what it intends to do with its operational armory to achieve the stated goals in Defence Production.

The primary feeling you get on reading the document is that the Govt. is perceived as a partner in this Global competition rather than as a Big Brother.

An analysis of a Govt. Policy is one which identifies and discusses what is in the policy for all stakeholders, and how the Govt., intends to move ahead to implement Policy.

……A Greek King.

I will try and match up to the Greek Kings quote. Kindly share your judgement in the comment section below!

So, who are the primary stakeholders?

  • Department of Defence Production [including DPSUs, OFBs]
  • Private Sector Businesses interested in Defence Businesses
  • The Govt. itself

What is in the DPEP Policy for Department of Defence Production and DPSUs, OFB, DRDO?

Department of Defence Production

6.6 of DPEPP Paper

The Department has to set up a Defence Investor Cell which will act as a nodal agency for resolving issues with Central, State and other Authorities. [Please do visit the website – lots of work has been done]

This cell, will assist MSMEs, Investors, and Vendors who are in Defence Production, which translates to those who are Licensed Defence Manufacturers, their vendors, and investors, who have issues with various authorities to carry out their functions. For instance, if a material vendor who supplies to a Tata Defence Unit, but is unable to get a import clearance, can approach this cell to assist in obtaining the clearance.

In effect, they ensure to help in removing obstacles from the Govt. authorities and enable smooth defence production.

6.8

DDP, in co-ordination with DPSUs and OFBs is expected to list out in detail all the Critical Products and Materials and consider issuing long term orders to domestic suppliers. The word Critical is in Bold in the policy paper, which means emphasis and I would expect this will be of top priority. More about this in the coming para.

7.1

To assist in carving out a distinct budget head for domestic capital procurement. This is an import step as it will reflect clearly the domestic capital requirement. The department is also expected to play a key role in enhancing the allocation at the rate of 15% per annum.

8.1.1

Over the years, India has accumulated over 4000 aero platforms [as disclosed in the paper]. The subsequent statement show the Govt. is far from satisfied. The Govt. expects the department of production to list out the critical gaps, and work to bridging the same. The department would do well to share the critical gaps with private sector and let the private sector come up with solutions and alternatives.

DPSUs

DPSUs will be positioned as System Integrators. Which really means DPSUs should exit from tier 2-3 level manufacturing, and spend all resources and focus energies on building products bringing assemblies and sub-assemblies together to build products.

What is in the DPEPP for Private Sector Businesses interested in Defence Business ?

5.3.1 and 2

Private sector businesses can register/empanel with TAC (Technology Assessment Cell) in the Ministry as System Integrators. This will enable the Department to have an understanding of the design, development, production capabilities in the country and facilitate co-operation.

6.8

Critical Products – The Govt. is focusing on reducing imports. Critical products and components are those products which the services and DPSUs are presently importing and the Govt. is interested to encourage domestic private sector to come up with offers to supply them.

It should be noted that these can be imported by a domestic company and delivered to the Govt.

6.9

Domestic Private sector companies can visit repair / maintenance units of Services and collect requirements for business opportunities.

12.1

Establish connections with Defence Attaches for specific country export promotion.

12.5

Private companies can Onboard with Department of Defence Production as Indian Offset Partners.

9.1

Become partners with DRDO to work on the following areas of weapon systems.

  • Gas Turbine Engines
  • Hypersonic Missiles
  • Ballistic and Cruise Missiles
  • Armoured Vehicles
  • Submarines
  • Fifth Generation Fighters
  • Transport Aircraft
  • Secure Communication Devices
  • Cyber Security Infrastructure
  • Surveillance Systems
  • AI, Robotics, unmanned platforms
  • Airborne sensors
  • Strategic materials

Govt. Assurances

  1. Continuation of Transparency in Defence Procedures and Policies
  2. Ordinance Factories will be corporatized [10.1]
  3. Disinvestment of DPSUs
  4. Level playing field of DPSUs with Private Sector [not mentioned in the paper. The DAP reveals that this policy is actively pursued and other decisions such as rationalization of import duties]
  5. Development of partnership model of DRDO and OFB with Private Sector
  6. Organizational reforms in DGQA
  7. Accredited third party inspection to augment DGQA infrastructure
  8. Investment in DGQA
  9. Defence attaches to support private sector
  10. End to End export clearances will be further upgraded
  11. Export of selected Weapon Systems to selected countries will be encouraged using the Multilateral Open General License
  12. Public Procurement Order will be made applicable to items, for which domestic production capability exists
  13. TReDS platform will be used for improving liquidity and timely payments

The Macro Big Picture

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