|With increased friction along the border with China, the government is focussing on improving connectivity in such areas. Finance Minister Arun Jaitley on Thursday proposed construction of a new tunnel in Arunachal Pradesh.|
In addition to boosting private sector participation in defence manufacturing, the government also plans to develop industrial corridors as well as unveil a new procurement policy.
“To secure the country’s defences, we are developing connectivity infrastructure in border areas… I now propose to take up construction of tunnel under Sela Pass,” Mr. Jaitley said in his Budget speech.
He referred to the Rohtang tunnel which has ensured all-weather connectivity to the Ladakh region and said the contract for the construction of the “Zozila Pass tunnel of more than 14 km is progressing well”.
Sela Pass is a high-altitude mountain pass in Arunachal Pradesh which is claimed by China.
Mr. Jaitley said measures would be taken to develop two defence industrial production corridors in the country. “The Government will also bring out an industry-friendly Defence Production Policy 2018 to promote domestic production by public sector, private sector and Micro, Small, Medium Enterprises,” he stated.
While the details of this new policy are awaited, it will join the various existing policies which guide defence procurement and manufacturing. In fact, last year the government brought in the Strategic Partnership (SP) model as part of the Defence Procurement Procedure (DPP) with the intent of providing the private sector a broad platform for large scale defence manufacturing.
Speaking to the media, Defence Minister Nirmala Sitharaman said, “Now that the announcement has been made for defence corridor, the first one will be built starting at Tamil Nadu, linking Chennai and Bengaluru. Announcement for the second corridor will soon be made.”
Responding to the announcements, Mr. Puneet Kaura, managing director & CEO of Samtel Avionics Ltd, said modernisation of defence forces and setting up of industrial corridors for defence were the two key takeaways from this budget.
“What remains to be seen how much sops or tax benefits these industrial corridors bring to the private industry, and contribute to ease of doing business,” he said.