Lok Sabha Question No. 2565 (UNSTARRED), answered on 2017-03-17
Subject: Indigenisation of Defence Equipment
Ministry: DEFENCE
Asked by: MANOJ RAJORIA

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE

## DEPARTMENT OF DEFENCE PRODUCTION

## LOK  SABHA UNSTARRED QUESTION NO.2565

TO BE ANSWERED ON THE 17 TH  MARCH, 2017

## INDIGENISATION OF DEFENCE EQUIPMENT

2565.  DR. MANOJ RAJORIA:

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

- (a) whether the Government has devised a roadmap for promoting indigenisation and attaining self-sufficiency in developing modern defence equipment;
- (b) if so, the details thereof; and
- (c) the  number of pacts / deals signed for the purchase of fighter aircrafts weapons and artilleries during the year 2015-16 and 2016-17, country-wise?

## 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. 2565 FOR ANSWER ON 17.3.2017

(a) & b): The Defence Production Policy promulgated by the Government,  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  as  possible,  creating conditions  conducive  for  private  industry  to  play  an  active  role  in  this endeavour; enhancing potential of SMEs in indigenisation and broadening the defence R&D base of the country.

In pursuance of the aforesaid Policy and 'Make in India' initiative of the Government, the  steps taken by the Government, inter-alia include:-

- i. In order to promote indigenous design and development of defence equipment,  a  new  category  of  procurement  'Buy  (Indian-IDDM (Indigenously designed, developed and manufactured) )' has been introduced in Defence Procurement Procedure-2016 and the same has  been  accorded  top  most  priority  for  procurement  of  capital equipment. The 'Make' Procedure has been simplified with provisions  for funding  of 90 %  of  development  cost  by  the Government to Indian industry for design, develop and manufacture of defence equipment.
- 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

:  2  :

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.

(c) During  the  year  2015-16  and  2016-17  (upto  February  2017),  37 contracts  have  been  signed  with  foreign  vendors  of  various  countries for capital procurement of defence equipment such as rockets, radars, artillery guns, helicopters, aircrafts, missiles, ammunition and simulators.    The  country-wise  number  of  contracts  signed  is  given below:

|   Sr. No | Country of foreign vendor   |   Number of contracts signed |
|----------|-----------------------------|------------------------------|
|        1 | USA                         |                            9 |
|        2 | Israel                      |                            7 |
|        3 | UK                          |                            5 |
|        4 | Russia                      |                            4 |
|        5 | Germany                     |                            3 |
|        6 | Sweden                      |                            3 |
|        7 | France                      |                            2 |
|        8 | Others                      |                            4 |

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