Indigenous defence production key to make India USD 5 trillion economy by 2024: Rajnath

The government has set a target of USD 26 billion turnovers in aerospace and military manufacturing in next five years, Defence Minister Rajnath Singh said on Saturday, noting that indigenous defense production was key to achieving the country's aim to be a USD 5 trillion economy by 2024. He said adequate thrust is being given on enhancing defense exports though the primary aim of indigenous defense production is to cater to the needs of the armed forces.

In an address at the ET Global Business Summit, urged the private sector to increase its participation in defense manufacturing to realise the government's vision of making India a USD 5 trillion economy by 2024. Last year, Prime Minister Narendra Modi set an ambitious target of making India's economy a USD 5 trillion one by 2024. The current size of the Indian economy is around USD 2.8 trillion.

In his address, Singh said the manufacturing sector has the potential to reach USD 1 trillion by 2025 and that the government is striving to achieve the goal by implementing key flagship programs like 'Make in India'. "In our envisaged Defence Production Policy, we have clearly spelled out our goal to achieve a turnover of USD 26 billion in aerospace and defense goods and services by 2025. This will have huge implications for India's endeavors to promote R&D, innovation and its efforts to secure a place in global supply chains," he said.

Asking the defense industry to make the best use of the opportunities, he said a slew of structural reforms has been initiated by the government to ensure synergy among key stakeholders. Singh said the government accorded approval to more than 200 proposals worth Rs 4 lakh crore in defense manufacturing in the last five years.

He also said the government's aim is to double the size of the aeronautics industry from Rs 30,000 crore to Rs 60,000 crore by 2024. He said a number of major platforms are envisaged in the defense aerospace sector including India's 90-seater civil aircraft, developing a civil helicopter industry of USD 5 billion in the public-private-partnership model.

He listed out several reform measures including simplification of the industrial licensing process, hike in FDI cap, making defense export less stringent, streamlining the defense offset policy and opening the government-owned trial and testing facilities for the private sector. Singh said defense public sector undertakings have been encouraged to increase their export portfolio to 25 percent of their turnover and the government is willing to extend Lines of Credit and grants to friendly foreign countries over the next five years.

"The government aims to achieve exports of defense goods and services to the tune of USD 5 billion in the next five years. All possible support would be extended to the private sector so that they can contribute significantly to enable us to achieve the said target," he added. Highlighting the decision to enhance foreign equity cap from earlier 26 percent to 49 percent under the automatic route and up to 100 percent under the government approval route, he said the measures have begun to show results.

"Till December 2019, the defense and aerospace sector has received inflows of over Rs 3,155 crore. Of this, Rs 1,834 crore have received since 2014. I am sure that the volume of investment will increase manifold when some of the major programs, which are in the pipeline, move into the execution phase," he added. Singh assured the industry that the government is open to new ideas and committed to fully harness the energies, entrepreneurship spirit and enterprise of the private sector in the defense sector. He expressed confidence that the industry will contribute even more to the government's efforts towards indigenization of defense production.

Singh stressed that the intention of the government is not just limited to bringing reforms but to act as an incubator, catalyst, and facilitator for promoting investment and achieving self-reliance in defense manufacturing. "We understand that Defence R and D in the private sector will take time to establish itself. To give a boost to this process, we have opened opportunities through DRDO (Defence Research and Development Organisation) with a zero fee for Transfer of Technology (ToT), free access to over 450 patents, access to test facilities and an upfront funding of up to Rs 10 crore," he said.

Singh said more than 900 licensing agreements for ToT have been signed with private industries. He also mentioned the opportunities being provided by the government for the manufacture of mega defense platforms including fighter aircraft, helicopters, tanks and submarines under the strategic partnership model.

The defense minister told the gathering that the government has prepared a roadmap for the application of artificial intelligence in national security set up, adding there is a plan to develop at least 25 defense specific artificial intelligence products by 2024.