Lok Sabha Question No. 1552 (UNSTARRED), answered on 2019-11-27
Subject: Achievement in Defence Production
Ministry: DEFENCE
Asked by: Manoj Rajoria, Rita Bahuguna Joshi

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

## LOK SABHA UNSTARRED QUESTION NO.1552

TO BE ANSWERED ON 27 th  November, 2019

## ACHIEVEMENT IN DEFENCE PRODUCTION

1552. DR. MANOJ RAJORIA:

SHRIMATI RITA BAHUGUNA JOSHI:

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

- (a) the achievements made in terms of weapon systems and ancillaries during the last three years under Make in India;
- (b) the level of indigenisation that has been achieved under Make in India; undertaken towards the same; and
- (c) the initiatives that have been undertaken towards the same; and
- (d) the response of the public and private defence industry to Make in India in defence?

## 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  IN  RESPECT  OF  PARTS  (a)  TO  (d)  OF  LOK  SABHA UNSTARRED  QUESTION  NO.  1552  REGARDING  'ACHIEVEMENT  IN DEFENCE PRODUCTION' FOR ANSWER ON 27.11.19

- (a) to (d): Government has taken following policy initiatives to promote indigenization and self-reliance in the defence sector: -
- 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  DPP2016 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)',  'Buy  and  Make  (Indian)'  &  'Make'  categories  of  capital acquisition over 'Buy (Global)' & 'Buy & Make (Global)' categories.
- iii. 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.
- 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, Startups, 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. 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 Cr per year for MSMEs. The industry funded Make-II Projects not exceeding development cost of Rs.3 Crore & procurement cost Rs. 50 Cr per year have also been reserved for MSMEs.

- vi. 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.
- vii. 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.
- viii. 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.
- ix. 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).
- x. 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.
- xi. 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.
- xii. 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.

- xiii. Defence  Investor  Cell  has  been  created  in  Feb-2018.  The  Ministry  to provide  all  necessary  information  including  addressing  queries  related  to investment opportunities, procedures and regulatory requirements for investment in the sector.
- xiv. 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.
- xv. 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.

Many significant new projects including 155mm  Artillery Gun system 'Dhanush',  Light  Combat  Aircraft  'Tejas',  'Akash'  Surface  to  Air  Missile  system, Attack Submarine 'INS Kalvari', 'INS Chennai' etc, have been produced in the India as a part of defence production in the country. In the last three years from 2016-17 to 2018-19  and  current  year  till  Sept  2019,  Government  has  accorded  Acceptance  of Necessity  (AoN)  to  130  proposals,  worth  Rs.  263,704  Crore  approximately,  under various categories of Capital procurement which promotes domestic manufacturing as per DPP-2016. The defence equipment procured through these categories are required to  comply  with  the  minimum  Indigenous  Content  prescribed  in  DPP.  Both  Indian public  and  private  defence  companies  are  allowed  to  participate  in  procurement  of capital items as per eligibility criteria prescribed in DPP.

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