Lok Sabha Question No. 3852 (UNSTARRED), answered on 2017-03-24
Subject: Manufacturing Defence Equipment
Ministry: DEFENCE
Asked by: AJAY (TENI) MISRA, POONAMBEN HEMATBHAI MAADAM

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE

## DEPARTMENT OF EX-SERVICEMEN WELFARE

## LOK  SABHA

## UNSTARRED QUESTION NO.3852

TO BE ANSWERED ON THE 24 TH  MARCH, 2017

## MANUFACTURING DEFENCE EQUIPMENT

3852.  SHRI AJAY MISRA TENI:

SHRIMATI POONAMBEN MAADAM:

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

- (a) whether    the  Government  has  prepared  any  scheme  to  make  the  country  selfreliant in respect of defence equipment;
- (b) if so, the details thereof;
- (c) whether  efforts are being made  by  the Government  to  encourage  private participation for manufacturing defence equipment in the country and if so, the details thereof;
- (d) the  total  number  of  FDI  proposals  received  and  foreign  defence  manufacturing projects started in the country during the last three years and the current year; and
- (e) the amount of FDI received during the said years?

## A    N    S    W    E    R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

र  ा रा य मं ी

(a) to (e):

A statement is attached.

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(DR. SUBHASH BHAMRE)

(डा. सुभाष भामरे)

## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (e)  OF  LOK SABHA UNSTARRED QUESTION NO. 3852 FOR ANSWER ON 24.3.2017

1. 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.
2. In  pursuance of the aforesaid Policy and 'Make in India' initiative of the Government, the steps taken by the Government, inter-alia include:-
3. (i)  In  order  to  promote  indigenous  design  and  development  of defence equipment, a new category of procurement 'Buy (IndianIDDM (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.
4. (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.
5. (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.
3. During  the  last  three  years  and  the  current  financial  year,  34  FDI proposals were received for consideration of Foreign Investment Promotion  Board  (FIPB),  out  of  which,  17  have  been  approved.  The  FDI equity  inflow for  April  2013-December 2016 in  defence sector  is 1  million USD.

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