Third Indigenisation List

Defence Minister has approved the third Positive Indigenisation List (PIL) of 780 strategically important Line Replacement Units (LRUs), sub-systems and components which are being manufactured by defence PSU. The indigenisation of the 780 items will be taken up under the ‘Make in India’ category. The category aims to achieve self-reliance by involving greater participation of the Indian industry.

Details –

• The fresh list specifies the timelines beyond which the strategically-important 780 items will be procured only from the domestic industry.
• The new list comes at a time when the US-led western countries have slapped wide-ranging sanctions against Russia for its invasion of Ukraine.
• India is faced with the challenge of maintaining high operational military readiness because almost 70% of its defence hardware and software is of Soviet or Russian-origin.

Background –

• Indian Government is pushing towards defence indigenisation. For this, it has, from time to time, released negative import list/positive indigenisation list.
  • • The items on the lists cannot be imported by the Services and should be sourced from within the country.
• In August 2020, the government notified the first negative import list of 101 items.
• In May 2021, the government notified the second list, comprising 108 items.
  • • It renamed the third list as ‘positive indigenisation list’.

What is the government doing for indigenisation?

• Change in Defence Procurement Policy (DPP) —
  • • The policy increased the Indigenous Content stipulated in various categories of procurement by about 10% to support the ‘Make in India’ initiative.
    • It added an additional category Buy (Indian-IDDM) as the most preferred way of defence goods acquisition.
      • IDDM – Indigenously Designed, Developed and Manufactured.
    • Preference has been given to ‘Buy (Indian)’, ‘Buy & Make (Indian)’ & ‘Make’ categories of acquisition over ‘Buy (Global)’ category.
• Negative import list/positive indigenisation list.
• Space created for private players —
  • • Government has incentivised the private sector to invest in defence manufacturing.
    • In this direction, it has relied on transfer of technology, providing a platform for handholding etc.
    • The government recently corporatised the Ordnance Factory Board and converted it into seven DPSUs.
• Enhanced capital outlays —
  • • A percentage of the capital outlay of the Defence budget had been reserved for procurement from the domestic industry.
      • Of the ₹1.52 lakh crore capital allocation in this year’s Defence budget, 68% had been reserved for procurement from the domestic industry.
• Budget 2022-23 —
  • • The annual Budget of 2022-23 announced that —
      • • Defence R&D will be opened up for industry, start-ups and academia
        • 25% of the Defence R&D budget has also been earmarked for this purpose.
    • In addition, this year’s budget also announced that an independent nodal umbrella body will be set up for meeting wide-ranging testing and certification requirements.