The Defence Production Policy promulgated by Government of India aims at achieving substantive self-reliance in the design, development and production of equipment, weapon systems, platforms required for defence in as early a time frame possible; creating conditions conducive for the private industry to take an active role in this endeavour, enhancing potential of SMEs in indigenisation and broadening the defence R&D base of the country.
In pursuance to the aforesaid policy, progressive development of competence level of Indian public and private industry and in line with the ‘Make in India’ initiative, the Government has taken several policy measures to give a boost to indigenous production of defence equipment requirement, which inter-alia, include preference to ‘Buy (Indian-IDDM)’, `Buy (Indian)’ and `Buy & Make (Indian)’ categories of acquisition over ‘Buy (Global)’ category in defence procurement; liberalisation of Foreign Direct Investment and Industrial Licensing Policy; level-playing-field between private sector and public sector through removing anomalies in taxation in Customs / Excise duty etc.
HAL is an autonomous entity and therefore based on the available opportunities, it takes decisions for diversification into other areas of aerospace sector which includes manufacture of commercial aircrafts also. However, such diversification plans are contingent upon financial viability of the projects and the requirements of Indian Armed Forces.