Lok Sabha Question No. 3672 (UNSTARRED), answered on 2018-08-08
Subject: Military Equipment
Ministry: DEFENCE
Asked by: Shrirang Appa Barne, KUNWAR PUSHPENDRA SINGH CHANDEL, PRITAM GOPINATH MUNDE, SHIVAJI ADHALRAO PATIL, ANANDRAO  ADSUL, DHARMENDRA YADAV, SHRIKANT EKNATH SHINDE, VINAYAK BHAURAO RAUT

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE DEPARTMENT OF DEFENCE

## LOK  SABHA

## UNSTARRED QUESTION NO.3672

TO BE ANSWERED ON THE 8 TH  AUGUST, 2018

## MILITARY EQUIPMENT

3672.  SHRI  SHRIRANG APPA BARNE:

SHRI KUNWAR PUSHPENDRA SINGH CHANDEL: DR. PRITAM GOPINATH MUNDE: SHRI ADHALRAO PATIL SHIVAJIRAO: SHRI ANANDRAO ADSUL: SHRI DHARMENDRA YADAV: DR. SHRIKANT EKNATH SHINDE: SHRI VINAYAK BHAURAO RAUT:

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Will the Minister of DEFENCE be pleased to state:

- (a) whether  the  Union  Government  has  planned  large  defence  outlay  including  in Bundelkhand Region for India's defence requirements in the future and if so, the details thereof;
- (b) whether partnership with foreign original equipment manufacturers is significant for co-production and co-development of military equipment;
- (c) if so, whether the Union Government has established a number of Joint Working Groups under Defence Technology and Trade Initiative (DTTI) to take forward mutually agreed projects for the benefit of the Armed forces;
- (d) if so, the details thereof and the result achieved in this regard;
- (e) whether any discussion  was held between India and USA to strengthen  defence trade  ties  and  create  opportunities  for  co-production  and  co-development  of  military equipment and if so, the details and the outcome thereof; and
- (f) the  other  steps  taken  by  the  Union  Government  for  co-production  and  codevelopment of military equipment?

## 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 (f): A Statement is attached.

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## STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (f) OF LOK SABHA UNSTARRED QUESTION NO. 3672 FOR ANSWER ON 8.8.018

(a) to (f):  (1)  The  Government has  decided to establish two defence industrial corridors to serve as an engine of economic development and  growth  of  defence  industrial  base  in  the  country.  While  one corridor spans Chennai, Hosur, Coimbatore, Salem and Tiruchirappalli in Tamil Nadu, the other extends across Aligarh, Agra, Jhansi, Kanpur, Chitrakoot and Lucknow in Uttar Pradesh (UP).

- (2) The partnership with foreign original equipment manufacturers is significant for the Indian defence industry particularly in the areas where the technology is not available in the country. The Defence Procurement Procedure (DPP)-2016 contains provisions related to acquisition of technology through Transfer of Technology (ToT) under Buy & Make, Buy & Make (Indian)  categories  of  capital  acquisition,  and  through  the Strategic Partnership Model.

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- (3) A  number  of  Joint  Working  Groups  have  been  established under DTTI to progress mutually agreed projects for the benefit of  the  Armed  Forces.  The  Joint  Working  Group  under  the  Air Force, handling the surveillance platform, has made considerable progress. The Indian Navy Joint Working Group is constructively engaged with US Navy for aircraft carrier technology cooperation for the on-going program. On the land systems  front  and  on  projects  under  the  DRDO,  both  sides have identified projects where scope of co-production co-development of systems exists.
- (4) The 7 th Defence Technology and Trade Initiative (DTTI) Meeting was  held  between  India  and  the  USA  delegation  on  18 th July, 2018  in  New  Delhi  with  the  aim  to  bring  sustained  leadership focus  to  the  bilateral  defence  trade  relationship  and  create opportunities for co-production and co-development of defence equipment.
- (5) The Union Government has taken the following major steps for co-production and co-development of military equipment:
4. (i) Government  has  notified  the  'Strategic  Partnership  (SP)' Model which envisages establishment of long-term strategic partnerships with Indian entities through  a transparent and competitive process, wherein they would tie up with global Original Equipment Manufacturers (OEMs) to seek technology  transfers  to  set  up  domestic  manufacturing infrastructure and supply chains.

- (ii) The 'Buy & Make (Indian)' and 'Buy & Make' categories facilitate capital acquisition of military equipment through an initial procurement of equipment in Fully Formed (FF) state  in  quantities  as  considered  necessary  followed  by indigenous  production  in  a  phased  manner  involving Transfer of  Technology (ToT)  of  critical  technologies  as per specified range, depth and scope.
- (iii) 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 micro, small and medium enterprises (MSMEs).
- (iv) A separate procedure for 'Make-II' sub-category has been notified wherein a number of industry friendly provisions such as relaxation of eligibility criterion, minimal documentation, provision for considering 'suo-moto' proposals  suggested  by  industry  /  individual  etc.,  have been introduced.
- (v) FDI Policy has been revised and under the revised policy, FDI  is  allowed  under  automatic  route  upto  49%  and beyond  49%  through  Government  route  wherever  it  is likely  to  result  in  access  to  modern  technology  or  for other reasons to be recorded.
- (vi) An  innovation  ecosystem  for  Defence  titled  Innovations for Defence Excellence (iDEX) has been launched on 12 th April 2018 by the Hon'ble PM during Def-expo 2018.   iDEX is aimed at creation of an ecosystem to foster innovation and  technology  development in Defence  and  Aerospace by  engaging  Industries  including    MSMEs,  Start-ups, Individual  Innovators,  R&D  institutes  and  Academia  and provide them grants / funding and other support to carry out  R&D  which  has  potential  for  future  adoption  for Indian defence and aerospace needs.

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- (vii) To promote the participation of private sector, Outsourcing  and  Vendor  Development  Guidelines  for DPSUs  and  OFB  have  been  issued. The  guidelines mandate each DPSU and OFB to have a short-term and long-term  outsourcing  and  vendor  development  plan  to gradually increase the outsourcing from private sector.
- (viii)  Government  has  set  up  the  Technology  Development Fund (TDF) to encourage participation of public / private industries especially MSMEs, through provision of grants,  so  as  to  create  an  eco-system  for  enhancing cutting-edge technology capability for defence applications.

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