Defence electronics policy in final stages of drafting, likely to announced in September

NEW DELHI: The government could announce India’s first Defence Electronics Policy, which will seek to streamline procurement and boost local manufacturing, as early as this September with the drafting of the document in its final stages.

The India Electronics and Semiconductor Association (IESA) and the National Association of Software and Services Companies ( Nasscom) – both are involved in the drafting — have recommended strengthening of aerospace and defence ecosystem to boost domestic manufacturing in tandem with Prime Minister Narendra Modi’s Make in India initiative.

The policy draft will put forth categorical recommendations for immediate, short-term, intermediate and long-term arrangements to boost indigenous production and localised integrators and suppliers.

“The final draft version is almost ready and we will be presenting it to officials in the Ministry of Defense in the second week of August,” IESA President and former Karnataka Principal Secretary MN Vidyashankar said. The framework will be unveiled on September 9, during the defence symposium, DEFTRONICS 2015, he said.

Once the draft is presented to the MoD, it will make the necessary changes and seek Cabinet approval, he said.

In December 2014, the MoD gave the task of formulating the draft to the country's premier electronics and software industry bodies. Their targets included streamlining electronics procurement process as the department deals with multiple vendors and finding ways to overcome security issues.

The draft has reached the final stages after several rounds of intense discussions with joint-secretary-level officials at the Ministry of Defense and Department of Defence Production, as well as representatives of Bharat Electronics, Hindustan Aeronautics Ltd and industry. Germany-based consultancy Roland Berger is advising in the process.

Of India’s total budgetary allocation, the armed forces’ share in 2015-16 is 13.88%, or Rs 2.46 lakh crore. Nearly Rs 1 lakh crore of this is earmarked for equipment component, including about Rs 70,000 crore for electronics procurement, which is largely dependent on imports.

“There lies Rs 70,000 crore worth indigenous production opportunity which could translate into a massive business for domestic manufacturers,” Vidyashankar said. The proposed policy is a step towards utilising this, taking care of small-scale units and suppliers, he said.