Defence Production Hits Record High in 2023-24

Key Highlights:

• Record Production Value: India’s indigenous defense production reached a record high of ₹1.27 lakh crore in FY 2023-24, marking a 16.7% increase from the previous fiscal year.
• Contribution by Sectors:
• Public Sector: Defense Public Sector Undertakings (DPSUs) and other Public Sector Units (PSUs) contributed 79.2% of the total value of production.
• Private Sector: The private sector accounted for 20.8% of the production value.
• Defence Exports: India’s defense exports also achieved a record high of ₹21,083 crore, reflecting a 32.5% growth from the previous fiscal year’s ₹15,920 crore.

Government Measures to Enhance Defense Manufacturing:

• Policy Reforms and Strategic Initiatives:
• Defence Procurement Procedure (DPP):
• Revised to boost indigenous manufacturing and increase procurement transparency.
• Introduction of the ‘Buy (Indian-IDDM)’ category prioritizes products designed, developed, and manufactured indigenously.
• Defence Production and Export Promotion Policy (DPEPP) 2020:
• Requires foreign defense companies to invest part of their contract value in India, promoting technology transfer and local manufacturing.
• Strategic Partnership Model:
• Encourages foreign companies to partner with Indian firms, fostering technology transfer and domestic production.
• Financial and Structural Support:
• Foreign Direct Investment (FDI):
• FDI limit increased to 74% through the automatic route and up to 100% with government approval for modern technology access.
• Defense Corridors:
• Two corridors established in Uttar Pradesh and Tamil Nadu to create a conducive manufacturing ecosystem and attract investments.
• Budget 2023-24:
• 75% of the defense capital budget earmarked for procurements from domestic sources.
• Defence Offset Policy:
• Encourages collaboration between Indian companies and foreign OEMs, supporting domestic manufacturing and technology transfer.
• Infrastructure and Innovation:
• Innovation for Defence Excellence (iDEX):
• Initiative to support innovation in defense by engaging startups and MSMEs with financial support and a platform for showcasing solutions.
• Technology Development Fund (TDF):
• Provides grants to MSMEs, startups, and academia for R&D in defense technology and products.
• Public-Private Partnership:
• Ordnance Factory Board (OFB) Corporatization:
• OFB restructured into seven new DPSUs to enhance autonomy, efficiency, and accountability.
• Increased Role of Private Sector:
• Private sector participation encouraged through measures like allowing private companies to bid for previously reserved contracts.

Future Goals and Projections:

• Turnover Target: Aim to achieve a turnover of ₹1.75 lakh crore in aerospace and defense goods and services by 2025, including ₹35,000 crore from exports.

The record high in defense production and the various measures implemented reflect India's commitment to enhancing its defense manufacturing capabilities, promoting self-reliance, and fostering innovation in the sector