Domestic mfg in defence sector not likely in near term: Report

Even as expectations run high from the proposed amendments in defence procurement procedure (DPP) policy, the proliferation of domestic manufacturing in the sector is not likely to take place in the near to medium term, says a report. India has lost many opportunities in the past and "the extent of indigenisation is far from the point where defence ordering can lead to meaningful domestic business," according to a recent report by ICICI Securities. "While a lot of excitement has been created around DPP 2013 and expected changes to it, proliferation of domestic manufacturing in the defence sector is not something to be expected in the near to medium term," it said.

"As such, any enthusiastic expectation on defence company valuations is difficult to sustain," it added. As per the report, limited areas such as radars and missiles, where the capability build-up process started taking shape long time back, would see indigenisation. "Over the next five years, we see limited prospects of meaningful indigenisation barring radars and missiles," the report added.

The government has appointed a committee to evolve a policy framework to facilitate 'Make in India' in defence manufacturing, align the policy evolved with DPP-2013 and suggest requisite amendments in DPP-2013 to remove bottlenecks in the procurement process and also simplify and rationalise various aspects of defence procurement. Defence Minister Manohar Parrikar had recently said the new and simplified defence procurement procedure would be out soon, and a defence procurement manual would also be finalised by June this year.