Context: In order to provide affordable facilities to private sector defence and aerospace companies for testing and validation of their designed weaponry, Defence Minister approved a Defence Testing Infrastructure Scheme (DTIS) with an outlay of Rs 400 crore.
- At present, India is one of the top importers of military hardware globally. The government has been focusing on making India a hub of defence production.
- According to the latest report by Stockholm International Peace Research Institute (SIPRI), a leading think-tank on military spending, India’s defence expenditure stood at USD 71.1 billion in 2019, which is third highest after the US and China.
- In 2017, the government came up with the Strategic Partnership (SP) model under which select private firms were to be roped in to build key military platforms like submarines and fighter jets in India in partnership with global defence majors.
- India plans to spend $130 bn on military modernization in the next 5 years, as achieving self- reliance in defence production is a key target for the Government of India.
- Over decades, the Defence Research & Development Organisation (DRDO), the 41 Ordnance Factories (OFs) and eight Defence Public Sector Undertakings (DPSUs) have created sophisticated and costly testing facilities for firearms, ammunition, electronics and radar at government expense.
About the scheme:
- Objectives: The Scheme aims at setting up Greenfield Defence Testing Infrastructure as a common facility under private sector with government assistance, mainly in DICs (Defence Industrial Corridors).
- The DTIS scheme, which will run for five years, envisages setting up six to eight test facilities in partnership with private industry.
- While the majority of test facilities are expected to come up in the two DICs (one in Tamil Nadu and the other in Uttar Pradesh), the scheme is not limited to setting up test facilities in the DICs only.
The Greenfield project is a project in which there is not any prior work.
- Often used for infrastructure the greenfield projects are started on the unused lands where there is no need demolish an existing structure.
- The projects for which demolition has to be done are called brownfield projects.
- The projects under the scheme will be provided up to 75 per cent government funding in the form of ‘grant-in-aid’.
- The remaining 25 per cent of the project cost will have to be borne by private entities and state governments. It will be borne by a Special Purpose Vehicle (SPV) composed of Indian private entities and concerned state governments.
- A special purpose vehicle, also called a special purpose entity (SPE), is a subsidiary created by a parent company to isolate financial risk. Its legal status as a separate company makes its obligations secure even if the parent company goes bankrupt.
- Mandate of SPVs: The SPVs, which will be registered under the Companies Act 2013, will be mandated to operate and maintain all the testing facilities, in a self-sustainable manner by collecting user charges.
- The equipment/systems tested will be certified as per appropriate accreditation.
- Testing facilities coverage: The DTIS guidelines specify the establishment of testing facilities for drones and Unmanned Aerial Vehicles (UAVs), radar, electronics/telecom equipment, rubber testing, noise and shock testing, specialised driving tracks, ship motion testing, ballistics and blast testing, and environmental test facilities.
- Significance: This is directed towards promoting indigenous defence capability, specifically amongst micro, small and medium enterprises (MSMEs) and start-ups.
- Defence Testing Infrastructure is often capital intensive requiring continuous upgradation, and it is not economically viable for individual defence industrial units to set up in-house testing facilities.
- The private sector will have access to such facilities too.
About Defence Industrial Corridor
- The Government of India took a policy decision to set up two Defence Production Corridors, one each in Uttar Pradesh (UP) and Tamil Nadu.
- These defence corridors will facilitate a well-planned and efficient industrial base that will lead to increased defence production in the country.
- The idea behind setting up defence industrial corridors is to ensure connectivity among various defence industrial units.
- The Tamil Nadu Defence Industrial Corridor — also called the Tamil Nadu Defence Production Quad as the nodal cities form a quadrilateral with one of them at the centre — includes Chennai, Hosur, Salem, Coimbatore and Tiruchirappalli as nodes.
- UP Defence Industrial Corridor: The Bundelkhand Region of UP. For setting up of the proposed Corridor in UP, six nodal points have been identified viz.Aligarh,Agra, Chitrakoot, Jhansi, Kanpur and Lucknow.
Source: Graphics News
Defence industry in India
- India has a mighty defence industrial base with 41 Ordinance Factories (OFs) 9 and 9 Defence Public Sector Undertakings (DPSUs), 10 collectively forming the public sector component; and more than 100 private companies.
- The Indian Ordnance Factories organisation - a family of 41 Ordnance Factories under the aegis of its corporate headquarters Ordnance Factory Board, Kolkata are engaged in production, testing, logistics, research, development and marketing of a comprehensive product range in the area of land, sea and air systems.
- Indian Ordnance Factories is the oldest and largest industrial setup which functions under the Department of Defence Production of the Ministry of Defence.
- The Defence Research & Development Organization (DRDO), India’s premier defence research organization, has over 50 laboratories under its aegis.
- Defence Research & Development Organisation (DRDO) is an agency under the Ministry of Defence.
- DRDO is India's largest research organisation. It has a network of laboratories engaged in developing defence technologies covering various fields, like aeronautics, armaments, electronics, land combat engineering, life sciences, materials, missiles, and naval systems.
- Defence Procurement Procedure 2016 provides great impetus to the MSMEs with certain categories of 'Make' products earmarked exclusively for MSMEs.
- In June 2014, the FDI cap in defence was increased from 26 per cent to 49 per cent, with prospect for further increase, provided modern technology is brought into the country.
- DPP 2016 had redefined design and development by the private sector—by dividing the ‘make procedure’ into two:
- Make I with 90 per cent government funding and Make II with no government funding.
- Make I is meant for major platforms involving critical technologies, large infrastructure and high investment.
- Make II provides opportunity to private industry to design and develop minor platforms, systems and components.
- Make IT caters to the needs of the three services so far, but can be extended to the central armed police forces managed by the Ministry of Home Affairs. Component requirements of defence PSUs and ordnance factories should also be met by Make II.