Modi said the government was keen to expand the role of private sector for Indian defence production and that preference would be given to defence products made locally
Prime Minister Narendra Modi Wednesday said the government did not want India to be the biggest importer of defence equipment in the world, and vowed to double output of defence manufacturing in the country. He was speaking at the inauguration of Aero India 2015 in Bengaluru.
India's annual defence import bill is roughly USD 20 billion; something that Defence Minister Manohar Parrikar recently described as "unaffordable" and having "undesirable consequences" for the economy.
In contrast, India's domestic defence production output is around USD 7 billion.
Modi said even a 20-25 percent decrease in defence import can create 2 lakh jobs in the country. Also, a 25 percent hike in domestic defence output can create 1 lakh skilled jobs, he said.
Modi said the government was keen to expand the role of private sector for Indian defence production and that preference would be given to defence products made locally.
He said the government would ensure that tax rules that placed domestic manufacturers of arms on an equal footing with imports.
This year's Budget has allocated around Rs 2.3 lakh crore towards defence spend on the third largest armed force in the world.
According to statistics on the Make in India website, 40 percent of the Budget is spent on capital acquisitions, and 60 percent of requirements is met through imports.
Last month, Defence Minister Manohar Parrikar proposed major changes in the Procurement Procedure and Production Policy to provide greater autonomy to state-run suppliers and Ordnance Factory Board (OFB) units for their expansion and diversification.
Many Indian companies are expanding their presence in the defence sector sensing an opportunity because of the government's thrust on domestic production.
Last week, the Anil Dhirubhai Ambani group announced its foray into the defence manufacturing space.
The same week, market was abuzz with talk that Mahindra and Mahindra will acquire a controlling stake in Pipavav Defence .
Ashok Leyland is among the companies betting big on the defence sector, with Managing Director Vinod Dasari recently telling CNBC-TV18 that it expected a 10-fold rise in its defence revenues to around Rs 6000 crore over the next 5-6 years.
Ashok Leyland stock price
On February 18, 2015, at 14:10 hrs Ashok Leyland was quoting at Rs 68.55, up Rs 2.35, or 3.55 percent. The 52-week high of the share was Rs 69.20 and the 52-week low was Rs 14.90.
The company's trailing 12-month (TTM) EPS was at Rs 1.65 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 41.55. The latest book value of the company is Rs 15.69 per share. At current value, the price-to-book value of the company is 4.37.
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