Rajnath asks Defence PSUs to help India achieve Rs 35,000 crore defence exports target by 2025
New Delhi, October 1, 2022
Defence Minister Rajnath Singh has urged Defence Public Sector Units (DPSUs) to help India achieve its Rs 35,000 crore defence exports target by 2025.
The Minister reviewed the working of the seven defence companies, carved out of the erstwhile Ordnance Factory Board (OFB), at a meeting here on Friday.
The day also marked the completion of one year of operations of the DPSUs as independent entities. They started operations on October 1, 2021.
During the meeting, the Minister was briefed by the officials of the Department of Defence Production on the progress made by the new DPSUs in the past year. Addressing the officers and employees of the companies virtually, Rajnath Singh stated that OFB corporatisation was a major reform to make the country "Aatmanirbhar" (self-sufficient) by unleashing the true potential of these entities.
He said these companies were moving smoothly on the path of progress with full autonomy, efficiency and accountability while protecting the interests of their employees.
“The erstwhile OFB, with its infrastructure and skilled manpower, was a strategic asset of the country, which made valuable contributions to national security. However, in the last few decades, there were concerns of the Armed Forces regarding high costs, inconsistent quality and delays in the supply of products. Being a Government department, the OFB had little accountability to show profits. There were age-old procedures, practices, paperwork and rules & regulations, which had lost relevance. Getting rid of these practices was the need of the hour and corporatisation was the best way forward. The government has been hand-holding these companies since the beginning. It is heartening to see that they are making strides of progress,” he added.
An amount of Rs 2,953 crore has been released to these companies in the form of equity, during the Financial Years 2021-22 and 2022-23 for modernisation and a further amount of Rs 6,270 crore was planned to be released up to 2026-27 for capital expenditure.
In addition, an amount of Rs 3,750 crore has been released in the form of an Emergency Authorisation Fund.
Rajnath Singh said the functional and financial autonomy provided to these new corporate entities, coupled with hand-holding by the Government, has started reflecting in their performance. Within a short span of six months i.e., October 01, 2021, to March 31, 2022, these new companies have achieved a turnover of more than Rs 8,400 crore, which is significant considering the Value of the Issue of erstwhile OFB during the previous financial years. For the financial year 2022-23 also, the seven new DPSUs have a projected cumulative sales target of approximately Rs 17,000 crore, which is significantly higher as compared to the previous achievements of the OFB.
Against the production achievement of approximately Rs 5,028 crore for the period April 1, 2021, to September 30, 2021, the new DPSUs have reported production achievement of more than Rs 6,500 crore in the first six months of the financial year 2022-23. Post-corporatisation, the new entities have shown marked improvement in productivity and quality in the changed corporate set-up.
In FY 2021-22, out of seven companies, six have indicated profits based on the provisional financial statements.
To further improve the functioning of these DPSUs, the Minister listed out some of the key areas to focus on. Terming the present era as technology-driven, he exhorted the companies to develop or get acquainted with the latest technologies, which are vital for the defence industry to make its mark at national and international levels. He urged them to lay special emphasis on modernisation through domestic research and development as it is the strongest and the safest way forward.
He stressed the need to increase India’s market share across the globe, describing it as the responsibility of the companies to contribute in the efforts towards achieving the objective. He called upon the companies to devise and implement strategies with an aggressive and progressive attitude to make their presence felt in competitive bidding.
He termed capital investment as another important aspect, in the context of which the Government was currently hand-holding the companies. He, however, stated that in this era of competition, the DPSUs should be able to raise capital from the market in the times to come.
“Defence manufacturing is an important sector to achieve the goal of self-reliance,” he added.
Rajnath Singh exuded confidence that in the times to come the companies will touch new milestones in turnover, profitability, market valuation and overall growth. He termed the companies as force multipliers that will take the defence production of the country forward and cement their position on the world stage.
“India is emerging as a global defence manufacturing hub. With the active participation of the private sector, we aim to bring India among the top countries in the world in the fields of design, production and exports. Today, our country is moving fast towards becoming a 5 trillion dollar economy. Our defence exports have increased 5-6 times to Rs 13,000 crore as compared to the last 7-8 years. The new management must explore new opportunities abroad along with meeting the domestic needs,” he said.
The Minister expressed the hope that the new companies will play an important role in the strengthening of the defence manufacturing ecosystem and also contribute significantly to the overall development of the economy.
Since their inception, these DPSUs have started exploring avenues to expand their business and adopted an aggressive approach to diversifying their customer base and product profile. During the last one year, the new companies have obtained domestic orders of more than Rs. 7,200 crore value.
Munitions India Limited (MIL) has obtained export orders worth more than Rs 1,500 crore for various types of ammunition in the last year. Gliders India Limited (GIL) has also obtained orders for the export of Parachutes.
Yantra India Limited (YIL) has made significant progress in product and customer diversification. This has helped them to get orders worth more than Rs. 300 crore from the non-defence market like Indian Railways.
Troop Comforts Limited (TCL) has developed items like Bullet Proof Jacket, Ballistic Helmets, ECWCS etc to enter a niche market and sustain its business in the long run.
Armoured Vehicles Nigam Limited (AVNL) has developed a new variant of Mine Protected Vehicle designed for CRPF, which may be useful for other Armed Forces also.
Advanced Weapons & Equipment India Limited (AWEIL) has received an order for the supply of JVPC carbines to the Delhi Police.
Munitions India Limited (MIL) has been able to successfully fire new variants of Pinaka Rocket, namely, the Pinaka Mk-I (Extended Range) and DPICM.
MIL has also successfully developed 40 mm UBGL ammunition, 500 kg General Purpose Bomb and 76/62 SRGM HEDA Ammunition.
India Optel Limited (IOL) has developed Driver Night Sights for Tanks which is the first in terms of technology of Fusion Imaging.
These new entities have initiated various measures toward optimal utilisation of their resources and cost reduction. They have also taken various cost-saving measures like reduction in expenditure towards overtime and non-production activities and measures like use of solar power, water recycling, switch over to LED etc.
Chief of Defence Staff General Anil Chauhan, Chief of the Army Staff General Manoj Pande, Vice Chief of the Naval Staff Vice Admiral S N Ghormade and senior officials of the Ministry of Defence were present on the occasion.