PM’s Address at DEFEXPO-2018

Governor of Tamil Nadu,

Deputy Speaker of Lok Sabha,

Chief Minister of Tamil Nadu,

Deputy Chief Minister of Tamil Nadu,

My Ministerial colleagues,

Distinguished visitors,

Friends.

कालइ वणक्कम् !

नमस्कारम् !

A very good morning to you all!

This is the 10th edition of Def-Expo.

Some of you may have attended this event several times. A few may even have been attending it since inception.

But for me, this is the first time at Def-Expo. I am both delighted and over-whelmed to see such a keen gathering here in this historic region of Kanchipuram in the great State of Tamil Nadu.

I am very happy to be here in the land of the great Cholas who established India’s historic civilization links through trade and education. This is the land of our glorious maritime legacy.

This is the land from where India Looked East and Acted East thousands of years ago.

Friends.

It is wonderful to see over five hundred Indian companies, along with over one hundred and fifty foreign companies present here.

More than forty countries have sent their official delegations as well. It is an opportunity like none other, not only to discuss India’s defense requirements, but also to show-case, for the first time ever, in such a manner, India’s own defence manufacturing capabilities to the world.

Armed Forces, the world over know the importance of supply chains. But it is not just on the battle-fields, but also on the factory floors of defence manufacturing enterprises, that strategic decisions are made.

Today, we live in an inter-connected world. The efficiency of supply chains is a key factor in any manufacturing enterprise. Therefore, the strategic imperative to Make in India, to Make for India, and to Supply to the World from India is stronger than ever before.

Friends.

Thousands of years of history of India shows that we have never desired any one’s territory.

Rather than winning countries through wars, India has believed in winning hearts. This is the land from where the message of peace and universal brotherhood has gone out since Vedic times.

This is the land from where the light of Buddhism spread to the world. In fact, from the time of Ashoka and even earlier, India has believed in using strength to protect the highest ideals of humanity.

In modern times more than one hundred and thirty thousand Indian soldiers sacrificed their lives in World Wars in the last century. India had no claim on territory. But Indian soldiers fought for restoring peace and up-holding human values.

Independent India has also sent one of the largest numbers of UN Peace-Keepers to places all over the world.

At the same time, an important responsibility of the State is to protect its own citizens. The Great Indian thinker and strategist Kautilya wrote the Arth-shastra more than two thousand years ago. He said that the King, or the ruler, must protect his people. And, he also said that peace is preferable to war. India’s defence preparedness is guided by these thoughts. Our commitment to peace is just as strong as our commitment to protect our people and our territory. And for this, we are ready to take all steps required to equip our Armed Forces, including through the establishment of a strategically independent defence industrial complex.

Friends.

We are conscious that creating a defence industrial complex is far from simple. We know that a lot needs to be done, and many pieces of this puzzle need to fit together. We are also aware/ that the defence manufacturing sector is unique in terms of government involvement. You need the government to grant a license to manufacture. Since the government is almost the only buyer in India, you also need the government to grant an order.

And, you need the government even to grant permission to export.

Therefore, over the last few years, we have made a humble beginning.

On defence manufacturing licenses, on defence offsets, on defence exports clearances, on Foreign Direct Investment in defence manufacturing, and on reforming our defence procurement, we have taken many steps.

In all these areas, our regulations, processes and procedures have been made more industry-friendly, more transparent, more predictable and more outcome oriented.The Defence Products List for the purpose of issuing licenses has been revised, and most of the components, parts, sub-systems, testing equipment and production equipment have been removed from the list to reduce entry barriers for the industry, especially for the small and medium enterprises.

Initial validity of Industrial License has been increased from 3 years to 15 years, with provision to further extend it by 3 years.

Offset guidelines have been made flexible by allowing changes of Indian Offset Partners and offset components, even in contracts already signed.

Foreign Original Equipment Manufacturers are now not required to indicate the details of Indian Offset Partners and products at the time of signing of contracts. We have also re-instated Services as an avenue of discharging offsets.

The Standard Operating Procedure for issue of export authorizations has been simplified and put in public domain.

The requirement of Government-signed End User Certificate for export of parts and components and other non-sensitive military stores, sub-assemblies, and sub-systems has been done away with.

The defence industry sector was closed to the private sector till May 2001, when it was first opened up to private sector participation by the Government of Shri Atal Bihari Vajpayee ji.

We have taken a step forward and revised the Foreign Direct Investment cap of 26 percent to 49 percent through the automatic route, and even up to 100 percent on a case-to-case basis.

The Defence Procurement Procedure has also been revised, with many specific provisions for stimulating the growth of domestic defence industry.

We have also de-notified some items earlier made exclusively by Ordnance Factories, so that the private sector, especially the micro, small and medium enterprises can enter this space.

For encouraging the development of Micro and Small enterprises in the defence sector, the Public Procurement Policy for Micro and Small Enterprises– which was notified in 2012 – has been made mandatory from April 2015.

And we have seen some encouraging initial results. In May 2014, the total number of defence licenses issued stood at 215. In less than four years, we have issued 144 more licenses through a much more transparent and predictable process.

In May 2014, the total number of defence export permissions granted stood at 118, for a total value of 577 million dollars. In less than four years, we have issued 794 more export permissions, for a total value of over 1.3 billion dollars. From 2007 to 2013, the targeted offsets obligations were 1.24 billion dollars, of which only 0.79 billion dollars worth of offsets were actually discharged. That is, an achievement rate of only about 63 percent.

From 2014 to 2017, the targeted offsets obligations were 1.79 billion dollars, of which 1.42 billion dollars’ worth of offsets were realized. This is an achievement rate of close to 80 percent. Procurement from Micro and Small Enterprises by the Defence Public Sector Undertakings and Ordnance Factories has gone up from about Rs. 3300 crores in 2014-15 to over Rs. 4250 crores in 2016-17. This is an increase of close to 30 percent.

It is heartening to note that the contribution of small and medium scale sector to defence production has grown by 200 percent in the last 4 years.

And, they are increasingly also becoming part/ of the global supply chains.

I am also pleased that the share of Indian vendors in the procurement orders placed through defence capital expenditure has gone up from about 50 percent during 2011-14 to over 60 percent during the last three years.

I am sure that this will improve further in the years ahead.

Friends,

Having said that, I am aware that we need to do a lot more.And, we are committed to do so.

We are committed to building a defence industrial complex that has room for everyone – public sector, private sector, as well as foreign firms.

We are committed to establishing two Defence Industrial Corridors – one right here in Tamil Nadu, and one in Uttar Pradesh. These defence industrial corridors will utilize the existing defence manufacturing ecosystems in these regions, and further build upon it.

These corridors will become the engines of economic development and growth of defence industrial base in the country. We have also established a Defence Investors Cell to assist and handhold the investors involved in Defence Production.

Friends’.

Government’s support for technology, innovation, research and development is essential for defence sector.

A Technology Perspective and Capability Road-map has been released to help the industry in planning and initiating technology development, partnerships and production arrangements.

In recent years, we have also taken various initiatives like Make In India, Startup India, and Atal Innovation Mission, to encourage innovation and entrepreneurship in the Indian commercial eco-system.

Today, we have launched the ‘Innovation for Defence Excellence’ scheme. It will set up Defence Innovation Hubs throughout the country to provide necessary incubation and infrastructure support to the start-ups in defence area.

Private venture capital into the defence sector, especially for start-ups will also be encouraged.

New and emerging technologies like Artificial Intelligence and Robotics are perhaps the most important determinants/ of defensive and offensive capabilities for any defence force in the future. India, with its leadership in Information Technology domain, would strive to use this technology tilt to its advantage.

Friends.

The former President and a great son of Tamil Nadu and India, Bharat Ratna Dr. A. P. J Abdul Kalam had called upon all of us to “Dream! Dream! Dream! Dreams transform into thoughts, and thoughts result in action”.

Our dream is to Develop the Ecosystem to Foster an Environment of New and Creative Entrepreneurship in the defence manufacturing sector.

And for this, in the weeks ahead, we will undertake extensive consultations with all stakeholders, including both Indian and Foreign companies, about our Defence Production and Defence Procurement policy space. I call upon all of you to actively participate in this exercise. Our aim is not just to discuss, but to draw the right lessons. Our intention is not to lecture, but to listen. Our goal is not merely to tinker, but to transform.

Friends.

We want to move fast. But, we do not want to take short cuts.

There was a time when, like many other aspects of governance, the critical issue of defence preparedness was also hampered by policy paralysis.

We have seen the damage such laziness, incompetence or perhaps some hidden motives, can cause to the nation.

Not now. Not anymore. Never again. Issues that should have been long addressed by previous governments, are being resolved now.

You would have seen how the issue of providing bullet proof jackets to Indian Army soldiers was kept hanging for years.

And, you would have also seen that we have brought the process to a successful conclusion with a contract that will provide a boost to defence manufacturing in India. You would also recall the long-drawn process of procurement of fighter aircraft that never reached any conclusion.

We have not only taken bold action to meet our immediate critical requirements, but have also initiated a new process to procure 110 fighter aircraft. We do not want to spend ten years in discussions without any tangible outcomes. We will work with you with a sense of mission to keep our defence forces equipped with state-of-the-art systems, and to create the necessary domestic manufacturing ecosystem to achieve this. And, in all our efforts to pursue efficiency and effectiveness in partnership with you, we will be guided by the highest ideals of integrity and probity.

Friends.

This sacred land brings to mind the legend Thiruvalluvar, a celebrated Tamil poet and philosopher.

He had said:

तोट्ट-नइ तूरूम् मनर्क्केणी माँदर्क्कु कट्र-नइ तूरूम् अङिवु

Meaning, “In sandy soil, when deep you delve, you reach the springs below; The more you learn, the freer streams of wisdom flow.”

I am confident that Def-Expo will provide the opportunity to professionals and industry to find new meeting ground for developing military industrial enterprises.

Thank you.

Thank you very much.