Lok Sabha Question No. 4961 (UNSTARRED), answered on 2017-03-31
Subject: Defence Assets
Ministry: DEFENCE
Asked by: RATTAN LAL KATARIA

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

## LOK  SABHA UNSTARRED QUESTION NO.4961

TO BE ANSWERED ON THE 31 ST  MARCH, 2017

## DEFENCE ASSETS

## 4961.  SHRI RATTAN LAL KATARIA:

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

- (a) whether    the  Government  has  taken  steps  for  creating  a  local  defence  industry where high-technology defence assets could be built;
- (b) if so, the details thereof;
- (c) whether any targets  for exports of defence equipment to friendly countries have been set by the Government, if so, the details thereof;
- (d) whether  some  biggest defence  assets  importers  have  shown  their  interest  in  the 'Make in India' programme and if so, the details thereof; and
- (e) whether the Government proposes to manufacture high-technology defence assets at Ambala, Haryana and if so, the details thereof?

## 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 (e): A Statement is attached.

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## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (e)  OF  LOK SABHA UNSTARRED QUESTION NO. 4961 FOR ANSWER ON 31.3.2017

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 the private  industry  to  take  an  active  role  in  this  endeavour;  enhancing potential  of  Small  and  Medium  Enterprises  (SMEs)  in  indigenisation  and broadening  the  defence  R&D  base  of  the  country.    In  pursuance  of  this policy  and  'Make  in  India'  initiative,  the  steps  taken  by  the  Government, 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  '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, 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.
4. (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.
5. (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.

:  2  :

- (v)  Offset  guidelines  have  been  made  flexible  by  allowing  change  of Indian Offset Partners (IOPs) and offset components, even in the already concluded 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.
2. No specific targets have been set for export of defence equipment to friendly countries as the same depends on the export orders bagged by the industry and clearances given by the Government to friendly countries.

3. So far 36 Foreign Direct Investment (FDI) proposals / joint ventures have been approved in defence sector for manufacture of various defence equipments.  However, since as per FDI policy, for defence sector, FDI upto 49% is allowed through automatic route.  Information related to cases with less than 49% FDI are not maintained by the Ministry.

4. At present, there is no proposal of Defence Public Sector Undertakings  (DPSUs)  and  Ordnance  Factory  Board  (OFB)  to  set  up manufacturing  unit  of  high  technology  defence  equipments  at  Ambala, Haryana.    No  private  company  has  been  issued  industrial  license  by Department of Industrial Policy & Promotion (DIPP) to set up manufacturing unit of defence equipment at Ambala, Haryana.

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