Why is it in the news?

• The first private sector facility for the manufacture of ammunition and missiles was inaugurated in Kanpur, Uttar Pradesh (UP), within the Defence Industrial Corridor (DIC) of the state.
• Uttar Pradesh is one of the two states in India designated for the establishment of Defence Industrial Corridors, the other being Tamil Nadu. These corridors aim to promote defence manufacturing and industrial growth in the respective regions.

Privatisation of Defence Sector

• India opened up its defence sector to 100% participation by the Indian private sector in 2001, aiming to bolster indigenous defence production capabilities.
• With India ranking as the third-largest military spender globally and the largest arms importer, indigenous production aims to reduce dependence on imports and enhance self-reliance.
• Privatisation efforts are geared towards reducing the share of the defence budget, which currently stands at 13.04% of the total government expenditure, while also fostering defence exports to achieve the set target of ₹35,000 crore by 2024-25.
• However, security concerns regarding the protection of sensitive data held by private companies, as well as the risk of weapons sales to entities not aligned with India’s national interests, pose significant challenges to privatisation efforts.

Government Initiatives for Indigenous Defence Production

• The Defence Acquisition Procedure (DAP)-2020 prioritizes the procurement of capital items from domestic sources.
• Liberalization of the Foreign Direct Investment (FDI) policy, allowing for up to 74% FDI under the automatic route, aims to attract foreign investment in the defence sector.
• The Innovations for Defence Excellence (iDEX) scheme promotes innovation in defence manufacturing.
• The SRIJAN portal facilitates indigenisation by Indian Industry, including Micro, Small, and Medium Enterprises (MSMEs).