On Sunday, the Defense Ministry announced an imports embargo on 101 defense items, to promote indigenous production and self-sufficiency. The embargo on imports is planned to be progressively implemented between 2020 and 2025.
The defense minister, Rajnath Singh, tweeted saying that he estimates that the domestic defense industry would receive contracts worth almost Rs four lakh crore within the next five to seven years as a result of the decision to prune the import list. The list of 101 items includes towed artillery guns, short range surface to air missiles, cruise missiles, offshore patrol vessels, electronic warfare systems, next generation missile vessels, floating dock, anti-submarine rocket launchers and short range maritime reconnaissance aircraft. India so far has domestically produced only 45% to 50% of the defense products that it uses, and the rest were imported. According to the Stockholm International Peace Research Institute, which tracks defense exports and imports globally, India has been the second largest importer between 2014 and 2019 with US$ 16.75 billion worth of defense machinery.
This move by the Defense Ministry was made under the ‘Atmanirbhar Bharat Package’, only a week after the ministry of defense released its Defense Production and Export Promotion Policy 2020. The DPEP aims to achieve a turnover of Rs 1,75,000 crores (US $5Bn) in Aerospace and Defense goods and services by 2025.
"This is a big step towards self-reliance in defense. It also offers a great opportunity to the Indian defense industry to rise to the occasion to manufacture the items in the negative list by using their own design and development capabilities or adopting the technologies designed and developed by the DRDO," Singh said.
He has also revealed that the Defense Ministry has bifurcated the MOD’s capital procurement budget for 2020-2021 and allocated 52,000 crore rupees for domestic capital procurement in the current financial year.
The defense minister believes that this will grant ample time and incentive for the defense industry to generate production, and the list released will enable them to be aware of which items will be in huge demand at the end of 5 years, enabling production accordingly. To ensure these timelines are met, Singh announced that the measures will include a co-ordinated mechanism for hand-holding of the industry by the defense services.
The embargo will come into force progressively over the next five years. According to a government document, import restrictions on 69 items will come into force from December 2020, while the embargo on another 11 items will be applicable from December 2021.
A separate list of four items will be subject to import restrictions from December 2022, while the ban on two separate sets of eight items will be applicable from December 2023 and December 2024. The import ban on long range land attack cruise missiles will come into force from December 2025.