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India announces restrictions on import of 101 defence items

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NEW DELHI (PTI): In a mega push to boost domestic defence production, Defence Minister Rajnath Singh on Sunday announced that India will stop import of 101 weapons and military platforms like transport aircraft, light combat helicopters, conventional submarines, cruise missiles and sonar systems under a staggered timeline till 2024.

Making the announcement on Twitter, the Defence Minister estimated that the domestic defence 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 of defence platforms and equipment.

Singh said the Defence Ministry is now ready for a "big push" to encourage indigenous defence manufacturing in tune with Prime Minister Narendra Modi's clarion call for an 'Atmanirbhar Bharat' (self-reliant India).

India is one of the largest importers of arms globally. According to estimates, the Indian armed forces are projected to spend around US$ 130 billion in capital procurement in the next five years.

The Defence Minister said the armed forces had contracted around Rs 3.5 lakh crore worth of military systems between April 2015 and August 2020 which have now been listed under the restrictions for import.

The decision to prune the import list of weapons systems under a year-wise schedule was first announced by Finance Minister Nirmala Sitharaman in May while rolling out reform measures for the defence manufacturing sector that included increasing the FDI limit from 49 per cent to 74 per cent under the automatic route.

"The embargo on imports is planned to be progressively implemented between 2020 and 2024. The aim behind promulgation of the list is to apprise the Indian defence industry about the anticipated requirements of the armed forces so that they are better prepared to realise the goal of indigenisation," Singh said.

The decision to restrict the import of the items came at a time India is expediting procurement of various military systems and weapons in view of a bitter border standoff with China in eastern Ladakh.

The Defence Minister said all necessary steps would be taken to ensure that timelines for domestic production of equipment identified under the negative list for import are met, adding the measures will include a co-ordinated mechanism for hand-holding of the industry by the defence services.

"Big and tough" decisions are being taken to promote self-reliance in defence production, he said while speaking at an online event.

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 come under the restrictions from December 2022 while the ban on two separate sets of eight items will be applicable from December 2023 and December 2024.

According to the document, the list of 101 items included 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.

The list also includes basic trainer aircraft, lightweight rocket launchers, multi-barrel rocket launchers, missile destroyers, sonar systems for ships, rockets, Astra MK I beyond visual range air-to-air missiles, light machine guns and artillery ammunition (155 mm) and ship-borne medium range guns.

"This is a big step towards self-reliance in defence. It also offers a great opportunity to the Indian defence 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 on Twitter.

He said the Defence Ministry has set a goal of a turnover of US$ 25 billion (Rs 1.75 lakh crore) in defence manufacturing in the next five years that included an export target of US$ 5 billion (Rs 35,000 crore) worth of military hardware.

In another relevant step, Singh said the Defence Ministry has bifurcated the capital procurement budget for 2020-21 between domestic and foreign capital procurement routes.

A separate budget head has been created with an outlay of nearly Rs 52,000 crore for domestic capital procurement in the current financial year, the Defence Minister added.

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 come under the restrictions from December 2022 while the ban on two separate sets of eight items will be applicable from December 2023 and December 2024.

The Defence Minister said the list of 101 items was prepared by the Ministry after several rounds of consultations with all stakeholders, including the three services, the Defence Research and Development Organisation (DRDO), defence public sector undertakings, ordnance factory board (OFB) and private industries.

"Almost 260 schemes of such items were contracted by the tri-services at an approximate cost of Rs 3.5 lakh crore between April 2015 and August 2020. With the latest embargo on import of 101 items, it is estimated that contracts worth almost Rs four lakh crore will be placed upon the domestic industry within the next five to seven years," Singh said.

"Of these, items worth almost Rs 1,30,000 crore each are anticipated for the Army and the Air Force while items worth almost Rs 1,40,000 crore are anticipated by the Navy over the same period," he added.

Singh said that the list also includes wheeled armoured fighting vehicles (AFVs) with indicative import embargo date of December 2021, of which the Army is expected to contract almost 200 at an approximate cost of over Rs 5,000 crore.

"Similarly, the Navy is likely to place demands for submarines with indicative import embargo date of December 2021, of which it expects to contract about six at an approximate cost of almost Rs 42,000 crore," he said.

"For the Air Force, it is decided to enlist the LCA MK 1A with an indicative embargo date of December 2020. Of these, 123 are anticipated at an approximate cost of over Rs 85,000 crore," he added.

The Defence Minister said more such equipment for import embargo would be identified progressively by the department of military affairs in consultation with all stakeholders.

He said a note on this will also be made in the defence acquisition procedure (DAP) to ensure that no item in the negative list is processed for import in the future.

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