Lok Sabha Question No. 2758 (UNSTARRED), answered on 2019-12-04
Subject: Indigenous Production of Weapons
Ministry: DEFENCE
Asked by: Pinaki Misra

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

## LOK SABHA UNSTARRED QUESTION NO.2758

TO BE ANSWERED ON 4 th  December, 2019

## INDIGENOUS PRODUCTION OF WEAPONS

2758. SHRI PINAKI MISRA:

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

- (a) the steps taken/being taken to indigenise the production of critical weapons in India;
- (b) whether any plan is in place to boost India's defence exports in the medium to long term;
- (c) if so, the details thereof; and
- (d) the steps being taken to encourage the growth of start-ups in the defence ecosystem?

## A    N    S    W    E    R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(SHRI SHRIPAD NAIK)

रक्षा राज्य मंत्री

( श्री श्रीपाद नाईक )

- (a) to (d):  A statement is attached.

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## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (d)  OF  LOK SABHA  UNSTARRED  QUESTION  NO.  2758  FOR  ANSWER  ON  04.12.2019 REGARDING 'INDIGENOUS PRODUCTION OF WEAPONS'

- (a): Government  has  taken  following  steps  to  indigenise  the  production  of  critical weapons in India:-
- i. A  new  category  of  procurement  'Buy  {Indian-IDDM  (Indigenously  Designed, Developed  and  Manufactured)}'  has  been  introduced  in  Defence  Procurement Procedure (DPP)-2016 to promote indigenous design and development of defence equipment.  It  has  been  accorded  top  most  priority  for  procurement  of  capital equipment.
- ii. The 'Make' Procedure has been simplified with provisions for funding of 90% of development cost by the Government to Indian industry and reserving Government funded  Make-I  projects  not  exceeding  development  cost  of  Rs.10  Crore  & procurement cost Rs. 50 Crore per year for MSMEs.  The industry funded Make-II Projects not exceeding development cost of Rs.3 Crore & procurement cost Rs. 50 Crore per year have also been reserved for MSMEs.
- iii. Separate procedure  for 'Make-II'  category has been  notified  under  DPP  to encourage indigenous development and manufacture of defence equipment. 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 in this procedure.
- iv. An innovation  ecosystem  for  Defence  titled  'Innovations  for  Defence  Excellence (iDEX)'  has  been  launched  in  April,  2018.  iDEX  is  aimed  at  creation  of  an ecosystem  to  foster  innovation  and  technology  development  in  Defence  and Aerospace by engaging Industries including 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.
- v. 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.
- vi. FDI  Policy  has  been  revised  and  under  the  revised  policy,  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.

- vii. Government has notified a 'Policy for indigenisation of components and spares used in  Defence  Platforms'  in  March,  2019  with  the  objective  to  create  an  industry ecosystem which is able to indigenize the imported components (including alloys & special materials) and sub-assemblies for defence equipment and platform manufactured in India.
- viii. Government has decided to establish two defence industrial corridors to serve as an engine  of  economic  development  and  growth  of  defence  industrial  base  in  the country. They span across Chennai, Hosur, Coimbatore, Salem and Tiruchirappalli in Tamil Nadu and spanning across Aligarh, Agra, Jhansi, Kanpur, Chitrakoot and Lucknow in Uttar Pradesh (UP).
- ix. A Policy  on  'Utilisation  of  Third  Party  Inspection  Services'  has  been  notified  in May, 2018 for effective administration of inspection Services with involvement of third parties and promote Ease of Doing Business for MSMEs and private sector.
- x. 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 allowed to provide the details of IOPs and  products  after  signing  of  contracts.  In  order  to  bring  more  transparency  and efficiency  into  the  Offset  discharge  process,  'Offset  portal'  has  been  created  in May, 2019.
- xi. The Ministry has instituted a new framework titled 'Mission Raksha Gyan Shakti' in November, 2018 which aims to provide boost to the Intellectual Property Rights (IPR) culture in indigenous defence industry.
- xii. Defence Investor Cell has been created in February, 2018 in the Ministry to provide all necessary information including addressing queries related to investment opportunities, procedures and regulatory requirements for investment in the sector.
- xiii. Defence  Products  list  requiring  Industrial  Licences  has  been  rationalised  and manufacture  of  most  of  parts  or  components  does  not  require  Industrial  License. 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.
- xiv. Department of Defence Production has notified 112 items under Public Procurement  Order  2017  issued  by  Department  for  Promotion  of  Industry  and Internal Trade (DPIIT). The Defence PSUs and OFB are thereby required to give preference  to  domestic  manufacturers  while  procuring  these  items  in  accordance with the said policy.

As a result of the aforesaid initiatives undertaken, the Government in the last five years i.e.  from  2014-15  to  2018-19  and  current  year  till  September,  2019,  has  accorded Acceptance of Necessity (AoN) to 218 proposals, worth Rs. 409,244 Crore approximately,  under  various  categories  of  Capital  procurement  which  promotes domestic manufacturing as per DPP-2016.

- (b)  &  (c)  : Following  policy  initiatives  have  been  undertaken  by  the  Government  to promote Defence Exports:-
- i. Standard Operating Procedure (SOP) for the export of munitions list items has been simplified to reduce the processing time for export authorisations.
- ii. A completely  end-to-end  online  portal  for  receiving  and  processing  authorisation permission  has  been  developed.  The  applications  submitted  on  this  portal  are digitally signed and the digitally signed authorisation are issued.
- iii. The Government has notified the Open General Export License (OGEL) - a onetime export  license,  which  permits  the  industry  to  export  specified  items  to  specified destinations,  enumerated  in  the  OGEL,  without  seeking  export  authorisation  on case to case basis during the validity of the OGEL.
- iv. Scheme  for  Promotion  of  Defence  Exports  has  been  notified  to  provide  an opportunity to the prospective exporters an option to get their product certified by the  Government  and  provides  access  to  the  testing  infrastructure  of  Ministry  of Defence  for  initial  validation  of  the  product  and  its  subsequent  field  trials.  The certificate can be produced by the prospective exporter for marketing their products suitably in the global market.
- v. A  separate  Cell  has  been  formed  in  the  Department  of  Defence  Production  to co-ordinate  and  follow  up  on  export  related  action  including  enquiries  received from various countries and facilitate private sector and public sector companies for export promotion.
- vi. Defence  Attaches  are  tasked  to  take  up  actions  for  promoting  exports  of  Indian made defence products both of public and private sector in the countries to which they are attached.
- vii. DRDO  provides  all  necessary  support  to  the  industries  for  export  of  DRDO designed  &  developed  product(s).  DRDO  has  evolved  a  compendium  of  'DRDO Developed  Product  with  Potential  for  Export',  which  provides  the  necessary  and handy information about the products ready for export.

(d). Following  steps  have  been  taken  to  encourage  the  growth  of  start-ups  in  the defence eco-system:

- i. The 'Make-II'  procedure  has  been  simplified  to  encourage  wider  participation  of Indian industry. The 'Start-up' recognized by Department for Promotion of Industry and  Internal  Trade  (DPIIT)  from  time  to  time,  are  eligible  to  participate  under 'Make-II' procedure.
- ii. Innovations  for  Defence  Excellence  (iDEX)  launched  by  Ministry  is  aimed  at creation  of  an  ecosystem  to  foster  innovation  and  technology  development  in Defence  and  Aerospace  by  engaging  Industries  including  MSMEs,  Start-ups, Individual Innovators, R&D institutes and Academia.
- iii. Defence  Research  &Development  Organisation  (DRDO)  has  evolved  a  new industry  friendly  ToT  policy  for  transfer  of  DRDO  developed  technologies  to industries.  DRDO  has  also  promulgated  new  patent  policy  to  facilitate  Indian industries to get free access to use DRDO patents.
- iv. DRDO  has  launched  Technology  Development  Fund  (TDF)  which  provides financial support to the Indian industries for the design, development of innovative defence products.

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