Lok Sabha Question No. 3773 (UNSTARRED), answered on 2017-03-24
Subject: Defence Manufacturing
Ministry: DEFENCE
Asked by: JAYSHREEBEN  PATEL, DEVAJIBHAI GOVINDBHAI FATEPARA, DARSHANA VIKRAM JARDOSH

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE

## DEPARTMENT OF DEFENCE PRODUCTION

## LOK  SABHA UNSTARRED QUESTION NO.3773

TO BE ANSWERED ON THE 24 TH  MARCH, 2017

## DEFENCE  MANUFACTURING

3773.  SHRIMATI JAYASHREEBEN PATEL: SHRI DEVAJIBHAI  G. FATEPARA: SHRIMATI DARSHANA VIKRAM JARDOSH:

Will the Minister of DEFENCE j{kk ea=h be pleased to state:

- (a) whether  the Government proposes to promote Defence and Aero Manufacturing under Make in India initiatives and if so, the details thereof;
- (b) whether the Union Government has received proposal from State Government of Gujarat for setting up of Defence and Aero Manufacturing cluster in Gujarat and if so, the details thereof and the action taken thereon; and
- (c) whether any area is identified or landmarked for Defence and Aero manufacturing in Gujarat and if so, the details thereof?

## A    N    S    W    E    R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(DR. SUBHASH BHAMRE)

र  ा रा य मं ी

(डा. सुभाष भामरे)

(a) to (c): A statement is attached.

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## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (c)  OF  LOK SABHA UNSTARRED QUESTION NO. 3773 FOR ANSER ON 24.3.2017

- (a) Since  the  launch  of  'Make  in  India'  in  September  2014,  several measures  have  been  taken  by  the  Government  to  promote  indigenous design, development and manufacture of defence & aerospace equipment in  the  country  by  harnessing  the  capabilities  of  the  public  and  private sector.  These measures inter alia include:
- (i) The  Defence  Procurement  Procedure  (DPP)  has  been  revised and has come into effect from 1 st April 2016.  A new category of procurement 'Buy {Indian-IDDM (Indigenously Designed, Developed  and  Manufactured)}'  has  been  introduced  in  DPP2016 which has been accorded top most priority for procurement  of  capital  equipment.    Besides  this,  preference has been accorded to 'Buy (Indian)' and 'Buy and Make (Indian)' categories  of  capital  acquisition  over  'Buy  (Global)'  &  'Buy  & Make  (Global)'  categories.    The  'Make'  Procedure  has  been simplified  with  provisions  for  funding  of  90%  of  development cost  by  the  Government  to  Indian  industry  and  reserving projects  not  exceeding  development  cost  of  Rs.  10  crore (Government  funded)  and  Rs.  3  crore  (Industry  funded)  for MSMEs.
- (ii) FDI Policy has been revised and under the revised policy, FDI upto 49% is allowed through automatic route and beyond 49% under Government approval route wherever it is likely to result in  access  to  modern  technology  or  for  other  reasons  to  be recorded.
- (iii) Industrial  licensing  regime  for  Indian  manufacturers  has  been liberalised  and most of  the  components / parts /  sub-systems have been taken out from the list of defence products requiring

Industrial  Licence.    This  has  reduced  entry  barriers  for  new entrants in this sector, particularly SMEs.  The initial validity of Industrial Licence has been increased from 3 years to 15 years with  a  provision  to  further  extend  it  by  3  years  on  a  case  to case basis.

- (iv)   Issues  related  to  level-playing  field  between  Indian  &  foreign manufacturers, and between public sector & private sector  have also  been  addressed.    These  include  Exchange  Rate  Variation (ERV)  protection  for  all  Indian  vendors,  removing  anomalies  in customs / excise duty etc.
- (v)  Offset guidelines have been made flexible by allowing change of Indian  Offset  Partners  (IOPs)  and  offset  components,  even  in signed contracts. Foreign Original Equipment Manufacturers (OEMs) are now not  required to indicate the details of  IOPs and products  at  the  time  of  signing  of  contracts.  'Services'  as  an avenue of offset have been re-instated.
- (vi)  The process for export clearance has been streamlined and made transparent & online.
- (b) & (c): The  Department  of  Industrial  Policy  and  Promotion  (DIPP) under  Ministry  of  Commerce  &  Industry,  administers  'Modified  Industrial Infrastructure  Upgradation  Scheme  (MIIUS)'  for  upgradation  of  common industrial  infrastructure  in    Industrial  Clusters  in  the  country.    Project proposals for Defence and Aero Manufacturing Clusters are also considered under MIIUS.

The  Ministry  of  Commerce  &  Industry  has  received  following  two proposals related to Defence and Aerospace manufacturing sector:-

- (i)  The first project proposal was for establishment of Defence park at Sanand  Industrial  Estate,  under  MIIUS,  from  Gujarat  Industrial Development Corporation (GIDC). Since, DIPP had already approved two other  non-defence  project  proposals  under  MIIUS, this proposal could not be considered due to cap of two projects per State in MIIUS guidelines.
- (ii)  Another  proposal was  received  from  Dholera  Industrial  City Development Limited (DICDL), Government of Gujarat for seeking support and guidance for attracting major Aerospace and Defence manufacturing companies to invest in Dholera.  DIPP had advised to DICDL to take up the proposal for establishment of Aerospace and Defence manufacturing park in Dholera with associations like Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce & Industry (FICCI) etc.

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