Rs 1,812 Cr Of FDI In Defence And Aerospace Since 2014: Ajay Kumar, Defence Secretary

Defence Secretary Ajay Kumar is credited with the stance of some critical policies in defence, particularly those that have quickly reached out to startups and private industry. This alumnus of IIT Kanpur, emphasises the Indian government’s focus on indigenisation of defence production and wooing investment into the sector in a chat with Manish Kumar Jha

Foreign direct investment (FDI) in defence was just about $2.18 million during 2018-19. Is it time to revisit the policy on FDI?

Only companies which require licence under the Industrial Act need government approval for bringing FDI and that too, only if the FDI is over 49 per cent. Other defence and aerospace companies do not require approval for bringing in FDI. Therefore, complete information on FDI flows in defence and aerospace is not available. 

Based on information collected from industry sources, FDI of over Rs 3,134 crore has so far been received in the defence and aerospace sectors. Out of this, 34 companies in the defence and aerospace sector have reported FDI of over Rs 1,812 crore since 2014. 

What are the implications of  the newly formed Department of Military Affairs (DMA)?

Formation of the Chief of Defence Staff (CDS) and the DMA are among the biggest reforms in the history of the defence establishment. It was also long awaited. It will promote greater coordination between the services and greater integration of the forces with the ministry. I think the reform will greatly boost the capabilities of our defence forces and enhance our overall security. Several committees have studied modernisation of the defence forces. The Department of Defence and DMA are working together and within the first few weeks we have made significant progress. 

We have already transferred nearly 60 officers from the Department of Defence to the DMA to enable smooth functioning of the DMA. Both the CDS and I have great understanding and I look forward to working with him to achieve the goals of this reform.

Today GST for aircraft and ships are at five per cent while engines and machinery, radars, communications etc., attract 12-18 per cent GST. Do you see scope for uniformity of rates across the value chain?

As part of Make in India in defence, wherever there is duty inversion, we have been taking the issue up with the Ministry of Finance. Based on our intervention, duties have been rationalised in several cases. If there are any other instances wherein such duty inversion is being experienced, the same will also be taken up with the Ministry of Finance for appropriate corrections. 

You have spoken of the need for 200 fighter jets. What is the timeline for induction of 114 Multi Role Fighter Jets under a strategic partnership?

The order for 83 light combat aircraft (LCAs) is in an advanced stage of price finalisation. As regards orders for 114 fighter jets, the Indian Air Force is studying the matter based on the responses received. 

What benchmark have you set for defence exports? What is the progress on the big ticket export of indigenous LCA Tejas and Brahmos?

During 2016-17, defence exports were worth Rs 1,522 crore and have increased to Rs 10,745 crore in 2018-19. We hope to achieve defence exports of  Rs 35,000 by 2024. Private industry has made a major contribution in this jump. 

The expansion has been possible because the number of items and the number of companies that are exporting have increased. From very few components in 2016-17, the product mix now includes  a range of items including night vision binoculars, weapon sights, wheeled infantry carriers, fire control systems, personal protective items, components of Fuze, containerised tubular shooting range solutions, light specialist vehicles, components of aircraft, parts of small arms, batteries, detonator cups etc., besides bigger platforms and ammunitions. The number of companies who are exporting has increased from 19 in 2016-17 to 58 in 2018-19.

We are building on this interest. Our defence attaches have been tasked to promote defence exports. Process changes have been made to streamline defence exports.

Indigenisation is a buzzword, but without a roadmap. The Defence Research and Development Organisation (DRDO) has a paltry budget of Rs 18,000 crore.  How do we plan to raise our stake in indigenisation? 

Technology development and indigenisation are a must for self-reliance in defence. The DRDO and other agencies of the government, including the service headquarters (design bureaus) and defence public sector undertakings and the Ordnance Factory Board are making a lot of efforts to promote greater technology development and indigenisation. Several new projects have been undertaken, which will take us to leadership positions. 

We are expanding the frontiers of R&D and technology development in the defence and aerospace ecosystem in partnership with industry. Under the Make-2 procedure, industry is partnering with the services to develop new technologies.