India Ramps Up Import Substitution Drive

The Indian Ministry of Defence (MoD) is rolling out a new policy to boost the level of indigenous content in defence equipment procured by the Indian Armed Forces.

The guidelines, which stem from a ‘Public Procurement (Preference to Make In India) Order’ issued in 2017, are in line with government objectives to boost local capability and reduce dependency on foreign imports.

A recent notification by the MoD’s Department of Defence Production (DDP) confirmed that under the public procurement order it has fixed an indigenous content level for a range of defence products, with the aim to encourage local industry to build components and subsystems locally.

The list of products was last updated in May 2019 and now totals 112 items.

Under the policy, Indian companies that can demonstrate the required level of local content in specific components will be given preference in procurement decisions. Local content is determined through calculations on costs and is verifiable by the DPP.

The DDP said in a notification earlier this month, “In furtherance of the Public Procurement Order, it is hereby notified that preference shall be provided by all procuring entities to domestically manufactured defence items/products as per the aforesaid order.”

The most recent item included in May 2019 on the list of products identified for local content is blast attenuation seats, the indigenous content level for which has been set at 65%.

Other items recently admitted onto the list include: avionics (45%), aerospace standard raw materials (45%), sonar domes for surface ships (50%), sea water pumps (50%), torpedo handling trolleys (50%), helicopter traversing systems (60%), main diesel engines (50%), integrated platform management systems (50%), inter-communication systems (60%), and various alloy steel plates (50%).

Other accompanying information published by the DDP show that the 112 specified items are usually produced by state-owned enterprises including Hindustan Aeronautics Limited, Bharat Electronics Limited, Bharat Dynamics Limited, the Ordnance Factory Board, Mazagon Dock Shipbuilders, and Goa Shipyard Limited.

Under the guidelines provided by the Public Procurement Order, the minimum local content required by local industry is “ordinarily 50%”, although the specific threshold is to be decided by the MoD and the procurement teams attached to the armed forces.

The list of products that the MoD will specify local content thresholds for is expected to expand over the coming few years. Additionally, the thresholds themselves are also anticipated to gradually increase in line with local capability advancement and the government’s ‘Make in India’ campaign to promote local manufacturing and enhance local income and employment.

Source:NDT

Image Courtesy: Hindustan 360