Lok Sabha Question No. 312 (STARRED), answered on 2019-01-02
Subject: Defence Products
Ministry: DEFENCE
Asked by: KUNWAR PUSHPENDRA SINGH CHANDEL

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

## LOK  SABHA STARRED QUESTION NO.312

TO BE ANSWERED ON THE 2 ND  JANUARY, 2019

## DEFENCE PRODUCTS

*312.  SHRI  KUNWAR  PUSHPENDRA  SINGH  CHANDEL:

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

- (a) the details of the policies regarding the manufacturing of State-of-the-art defence products;
- (b) whether the Government  has signed any strategic agreement with private companies regarding the manufacturing of defence products in the country;
- (c) if so, the details thereof; and
- (d) the details of the efforts made by the Government for the transfer of State-of-theart defence technology to India?

## A    N    S    W    E    R

MINISTER OF DEFENCE                                    (SMT. NIRMALA SITHARAMAN)

j{kk ea=h

¼Jherh  fueZyk lhrkje.k )

(a) to (d): A Statement is laid on the Table of the House.

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## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (d)  OF  LOK SABHA STARRED QUESTION NO. 312 FOR ANSWER ON 2.1.2019

1. Self-reliance is a major corner-stone on which the military capability of any nation rests. Accordingly, the Defence Production Policy promulgated  by  the  Government,  aims  at  achieving  substantive  selfreliance in the design, development and production of equipment, weapon systems, platforms required for defence in as early a time frame possible, creating conditions conducive for private industry to play 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.
2. In  view of the aforesaid policy and 'Make in India' initiative, several policy initiatives have been taken for promoting manufacturing of State-ofthe-art defence products.  These include:-
3. (a) Innovations for Defence Excellence  (iDEX):   iDEX  framework was launched on 12 th April 2018 by the Hon'ble Prime Minister during Defexpo India 2018, which aims at creation of an ecosystem to foster innovation  and  technology  development  in  Defence  and  Aerospace by engaging Industries including micro, small and medium enterprises ( 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.
4. (b) Artificial Intelligence (AI):  A multi-stake holder Task Force was constituted by the Ministry to prepare a road map for AI in national security  by  leveraging  the  existing  AI  capabilities  and  to  make recommendations relating to making India a significant power of AI in defence,  specifically  in  the  area  of  aviation,  naval,  land  systems, cyber,  nuclear  and  biological  warfare  including  both  defensive  and offensive needs including counter AI needs. The Task Force submitted its Report to Hon'ble Raksha Mantri on 30 th June, 2018.
5. (c) Mission  Raksha  Gyan  Shakti:    The  Ministry  has  instituted a new framework titled 'Mission Raksha Gyan Shakti' which aims to provide  a  boost  to  the  IPR  culture  in  indigenous  defence  industry. This  would  facilitate  the  migration  from  the  culture  of  seeking Transfer  of  Technology  (ToT)  from  foreign  sources  to  generating Intellectual  Property  in  India,  to  achieve  the  goal  of  self-reliance  in Defence sector.

- (d) Technology  Development  Fund:    Government  has  set  up  the Technology Development Fund (TDF) scheme, which aims at funding the  development  of  defence  and  dual  use  technologies  that  are currently not available with the Indian defence industry.   The focus of this scheme is for development of  technologies that can form the Kernel  of  components  /  assemblies,  which  can  in  turn  be  used  to develop defence equipment.

(e) Foreign  Direct  Investment  (FDI):    In    May  2001,  the  Defence industry  sector,  which  was  hitherto  reserved  for  the  public  sector, was opened up to 100% for Indian private sector participation,  with Foreign Direct Investment (FDI)  upto  26% both subject to licensing. Further,  Department  of  Industrial  Policy  &  Promotion,  Ministry  of Commerce  &  Industry  vide  Press  Note  No.  5  (2016  Series)  has notified revised FDI policy under which 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.

- (f) Provisions  in  Defence  Procurement  Procedure  (DPP-2016): Additionally, several enabling  provisions  have been incorporated  in the  DPP-2016  for  promoting  manufacture  of  the  State-of-the-art defence products and technologies, which are placed at Annexure-I.
3. During the last three years and the current year (upto October 2018), 121 contracts worth Rs. 73,918 crore have been signed with Indian vendors for procurement of defence equipment for Armed Forces.

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## ANNEXURE-I    REFERRED  IN  THE  REPLY  GIVEN  IN  THE  STATEMENT  IN PARA  2(f) OF LOK SABHA STARRED QUESTION NO. 312 FOR ANSWER ON 2.1.2019

- (a) Buy  (Indian-IDDM)  in  Defence  Procurement  Procedure  (DPP-2016): One  of  the  notable  feature  of  DPP-2016  is  the  introduction  of  a  new procurement category Buy (Indian-IDDM). This category refers to procurement of defence equipment from Indian vendors of products that are indigenously designed, developed and manufactured. (b) 'Make'  Procedure:    The  'Make'  Procedure  has  been  revised  to promote  indigenous  design,  development  and  manufacture  of  defence equipment / platform required by the armed forces with a view to achieve self-reliance.  The  new  procedure  is  likely  to  give  substantial  boost  to manufacturing  of  indigenously  designed  products  through  collaborative process  with  Indian  industry.      In  addition,  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. The  Standard Operating  Procedure  (SOP)  for  consideration  of  'suo-moto'  proposals under 'Make-II' sub / category of Capital Acquisition has been promulgated. (c) Defence  Offsets:    Offset  implementation  process  has  been  made flexible  by  allowing  change  of  Indian  Offset  Partners  (IOPs)  and  offset components, even in signed contracts. (d) Strategic Partnership (SP):   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. (e) Buy  and  Make  (Indian):      The  Buy  &  Make  (Indian)  category  has a provision for procurement from an Indian vendor engaged in a tie-up with a foreign OEM, involving Transfer of Technology (ToT) of critical technologies. (f) Buy  and  Make:    The  'Buy  &  Make'  category  has  provision  for procurement from a foreign vendor, through an Indian Production Agency (PA), involving Transfer of Technology (ToT) of critical technologies. Multiplier for Technology Acquisition by DRDO:   A multiplier up to 3 is  permitted  in  the  discharge  of  offset  obligations  relating  to  technology
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- (g) acquisition by DRDO.