Lok Sabha Question No. 3296 (UNSTARRED), answered on 2017-08-04
Subject: Defence and Aero Manufacturing
Ministry: DEFENCE
Asked by: DARSHANA VIKRAM JARDOSH

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE DEPARTMENT OF DEFENCE PRODUCTION

## LOK  SABHA UNSTARRED QUESTION NO.3296

TO BE ANSWERED ON THE 4 TH  AUGUST, 2017

## DEFENCE AND AERO MANUFACTURING

3296.  SHRIMATI DARSHANA VIKRAM JARDOSH:

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

- (a) whether  the  Government  has  taken  steps  for  promotion  of  defence  and  Aero manufacturing under 'Make in India' initiatives and if so, the details thereof; (b) whether  the  Union  Government  has  received  any  proposal  from  the  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 Aero
- (c) whether any area is identified or land earmarked for Defence and manufacturing in Gujarat and if so, the details thereof?

| A N S W E                                    | R SUBHASH BHAMRE)   |
|----------------------------------------------|---------------------|
| MINISTER OF STATE IN THE MINISTRY OF DEFENCE | (DR.                |
| 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. 3296 FOR ANSWER ON 4.8.2017

(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. 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  DPP-2016  which  has  been accorded  top  most  priority  for  procurement  of  capital  equipment. Besides  this,  preference  has  been  accorded  to  procurement  under '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,  Foreign Investment up to 49% is allowed through automatic route and above 49% under Government 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  under  IDR {Industries (Development and Regulation)} Act,1951 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 under  IDR  Act,  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  existing  tax  anomalies 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 discharge of offset have been re-instated.

- vi. The  process  for  export  clearance  has  been  streamlined  and  made transparent & online.
- vii. Recently,  the  Government  has  notified  the  'Strategic  Partnership (SP)'  Model  which  envisages  establishment  of  long-term  strategic partnerships  with  Indian  companies  through  a  transparent  and competitive process, wherein they are required to engage with global OEMs  for  Transfer  of  Technology  and  domestic  manufacturing infrastructure.

(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.

Gujarat Industrial Development Corporation (GIDC) and Dholera Industrial City Development Limited (DICDL), after identifying the land around Sanand  and  Dholera  respectively,  forwarded  the  following  two  proposals related to Defence  and  Aerospace  manufacturing  sector  to Ministry of Commerce & Industry, Government of India :-

- (i) The first project proposal was for establishment of Defence park at Sanand Industrial Estate, under MIIUS, from 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  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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