Lok Sabha Question No. 6005 (UNSTARRED), answered on 2018-04-04
Subject: Defence Industrial Production Corridors
Ministry: DEFENCE
Asked by: BHARAT SINGH, AJAY (TENI) MISRA, B. SREERAMULU

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE

## DEPARTMENT OF DEFENCE PRODUCTION

## LOK  SABHA UNSTARRED QUESTION NO.6005

TO BE ANSWERED ON THE 4 TH  APRIL, 2018

## DEFENCE INDUSTRIAL PRODUCTION CORRIDORS

6005.  SHRI  BHARAT SINGH: SHRI  AJAY  MISRA  TENI: SHRI  B. SRIRAMULU:

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Will the Minister of DEFENCE be pleased to state:

- (a) the  time  by  which  the  defene  industrial  production  corridors  are  likely  to  be developed;
- (b) whether the Government has set any deadline in this regard and if so, the details thereof; and
- (c) the  steps  taken  by  the  Government  to  develop  and  nurture  intrinsic  defence production capability for meeting our defence needs?

## A    N    S    W    E    R

MINISTER OF DEFENCE                                    (SMT. NIRMALA SITHARAMAN)

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(a) & (b):   Consequent to the announcement  in  the Budget Speech (2018-19)  by  Hon'ble  Finance  Minister  for  setting  up  of  two  Defence Industrial  Production  Corridors  in  the  country,  the  Government  has decided to establish two such corridors, one in Tamil Nadu and the other in Uttar Pradesh.

A  Detailed  Project  Report  (DPR)  will  be  prepared  for  setting  up  of these Corridors. Based on the DPR, the proposal for setting up of defence industrial  production  corridors  covering  all  aspects  namely,  timelines, details of expenditure etc. would be decided.

- (c)     As enclosed at Annexure-I.

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## ANNEXURE-I    REFERRED    IN  THE  REPLY  GIVEN  IN  PART  (c)  OF  LOK SABHA UNSTARRED QUESTION NO. 6005 FOR ANSWER ON 4.4.2018

Government  has  taken  following  policy  measures  to  develop  and nurture defence production capability for meeting our defence needs:

- i. Defence Procurement Procedure (DPP) has been revised in 2016 wherein specific provisions have been introduced for stimulating growth of the domestic defence industry.
- ii. A  new category of  procurement 'Buy  {Indian-IDDM (Indigenously Designed, Developed and Manufactured)}' has been introduced in DPP-2016  to  promote  indigenous  design  and  development  of defence  equipment.  It  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.
- iii. 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.
- iv. 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.
- v. 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 proposals suggested by industry / individual etc., have been introduced.
- vi. FDI Policy has been revised and under the revised policy, Foreign Direct Investment (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.

:  2  :

- vii. The  Defence  Products  List  for  the  purpose  of  issuing  Industrial Licenses  (ILs)  under  IDR  Act  has  been  revised  and  most  of  the components, parts, sub-systems, testing equipment and production equipment have been removed from the list, so as to reduce  the  entry  barriers  for  the  industry,  particularly  small  & medium  segment.    The  initial  validity  of  the  Industrial  Licence granted  under  the  IDR  Act  has  been  increased  from  03  years  to 15  years  with  a  provision  to  further  extend  it  by  03  years  on a case-to-case basis.
- viii. The process for export clearance has been streamlined and made transparent & online.
- ix. 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.
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