As an institution, the OFB should have been a prime component of our ‘Atmanirbharata’, (self-reliant) and vital for our strategic autonomy and comprehensive national power (CNP). Accordingly, one major component of the special economic package of Rs 20 lakh crores announced by the Prime Minister on 14 May 2020 to revive the Indian Economy from the fallouts of COVID-19, addresses key structural reforms in the Defence Sector.
On 16 May, the Finance Minister revealed the ingredients of the reforms; one of them being the ‘Corporatisation of the OFB’. The Defence Minister Rajnath Singh followed up and announced on 9 August a list of 101 types of military equipment, weapons and ammunition which will be progressively barred from being imported starting December this year.
The “Negative Import List” of 101 embargoed items comprises not just simple parts, but also some high technology weapon systems like artillery guns, assault rifles, warships, sonar systems, submarines, light transport aircraft, light combat helicopters (LCHs), radars and light combat aircraft. Any item on the ‘negative list’ can now only be sourced from the domestic industry.
Ministry of Defence (MoD) will place orders worth Rs 4 lakh crores with the domestic industry over the next 5-7 years by cutting down on these imports. For now, India remains a top importer of weapons and equipment.
The key highlights of the announcements concerning the defence sector as given out in the various press releases issued by the Government of India are enumerated below:
Policy Reforms in Defence Production
- FDI limit in Defence manufacturing under automatic route will be raised from 49 per cent to 74 per cent. This could well be a game changer as tweeted by the Finance Minister.
- Time-bound defence procurement processes and faster decision making will be ushered in by setting up of a Project Management Unit (PMU) to support contract management.
- Realistic setting of General Staff Qualitative Requirements (GSQRs) of weapons/platforms, and overhauling Trial and Testing procedures.
Enhancing Self Reliance in Defence Production
- ‘Make in India’ for self-reliance in Defence Production will be promoted by notifying a list of weapons/platforms for ban on import with year wise timelines, and indigenization of imported spares, and separate budget provisioning for domestic capital procurement resulting in reduction of huge Defence import bill.