Lok Sabha Question No. 738 (UNSTARRED), answered on 2019-06-26
Subject: Defence Production
Ministry: DEFENCE
Asked by: Rodmal Nagar, Sudhakar Tukaram Shrangre, Devji Mansingram Patel

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

## LOK  SABHA

## UNSTARRED QUESTION NO.738

TO BE ANSWERED ON THE 26 TH  JUNE, 2019

## DEFENCE PRODUCTION

## 738. SHRI RODMAL NAGAR:

SHRI SUDHAKAR TUKARAM SHRANGARE:

SHRI DEVJI M. PATEL:

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

- (a) the details of work done till date to make the country a defence production hub;
- (b) the defence and weapon system selected for the purpose;
- (c) whether the Government has signed any agreement with foreign countries to increase export of military equipment and services; and
- (d) if so, the details thereof?

## A    N    S    W    E    R

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MINISTER OF DEFENCE                                    (SHRI RAJNATH SINGH)

j{kk ea=h

¼Jh राजनाथ स िंह )

(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.  738  FOR  ANSWER  ON  26.06.2019 REGARDING 'DEFENCE PRODUCTION'.

## (a) & (b):

(i) Ordnance  Factories  and  Defence  Public  Sector  Undertakings  have  played  a huge role in making our country a defence production hub.  There are 41 Ordnance Factories and 9 DPSUs in our country contributing to more than Rs.58,000 crores approx.  in  defence  production  every  year.    Government  provides  support  to Defence  Public  Sector  Undertakings  and  Ordnance  Factories  to  expand  their activities. As a result of these efforts, the Defence Public Sector Undertakings have achieved the turnover of Rs.45,776 Crores in 2018-19 which is the highest ever by the  Defence  PSUs.  Four  Defence  PSUs,  viz.  Hindustan  Aeronautical  Ltd.(HAL), Bharat Electronics Ltd.(BEL), Mazagon Dock Shipbuilders Ltd.(MDL) and Bharat Earth  Movers  Ltd.  (BEML) have recorded their highest turnover  during  the  year 2018-19.

(ii)  As a part of Prime Minister's Agenda for public sector enterprises, the Defence PSUs have been given a target to achieve 25% of their turnover through exports by 2022-23.  Further,  they  have  also  been  targeted  to  indigenize  Rs.15,000  Crores worth  goods  by  2022-23.  Each  defence  PSU  is  in  the  process  of  developing  to projects relating to Artificial Intelligence.

(iii) Several  steps  have  also  been  taken  to  strengthen  Ordnance  Factory  Board. These include :

- (a) Approval, in principle, has been granted for 15 proposals of Rs.861 Crores for capital upgradation and modernization of Ordnance Factories during 2018-19.
- (b) OFB Procurement Manual has been revised during 2018-19 to streamline the procurement of store items in OFB. Export division under Member, OFB has been started to promote greater exports from OFB and enhanced delegation of powers given to Member (Exports) of OFB.
- (c) 494 workers of Ordnance Factory, Avadi are being re-skilled for employment in new trades.

2. In  pursuance  of  'Make  in  India'  initiative  of  the  Government,  following measures have been taken to achieve substantive self-reliance in defence production: -

- 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. 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.
- iv. 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.
- v. 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  proposals suggested  by  industry/individual  etc.,  have  been  introduced.  Till  date,  36 proposals  for  development  by  industry  have  been  given  'in-principle' approval under Make-II. List of Proposals is attached as Annexure .
- vi. 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.  These  are  spanning  across  Chennai,  Hosur, Coimbatore, Salem and Tiruchirappalli in Tamil Nadu and spanning across Aligarh,  Agra,  Jhansi,  Kanpur,  Chitrakoot  and  Lucknow  in  Uttar  Pradesh (UP).
- vii. 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.

- viii. The Ministry has instituted a new framework titled 'Mission Raksha Gyan Shakti'  which  aims  to  provide  boost  to  the  IPR  culture  in  indigenous defence industry.
- ix. 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
- x. Defence  Investor  Cell  has  been  created  in  the  Ministry  to  provide  all necessary  information  including  addressing  queries  related  to  investment opportunities, procedures and regulatory requirements for investment in the sector.
- xi. 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.
- xii. The  Defence  Products  List  for  the  purpose  of  issuing  Industrial  Licenses (ILs) under IDR Act has been revised and most of the components, parts, sub-systems, testing equipment  and production equipment  have been removed from the list,  so  as  to  reduce  the  entry  barriers  for  the  industry, particularly small & medium segment.  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. So far, Government has issued 439 licenses covering 264 companies till  March  2019. Industrial Licenses are issued for manufacturing of tanks and other armoured fighting vehicles, defence aircraft, space craft and parts thereof, warship, arms  and ammunition  and  allied items of defence equipment, parts and accessories thereof. In addition, for a large number of defence  components,  no  license  is  required.  There  are  more  than  8000 MSMEs  which  are  among  the  vendor  base  of  OFB  &  Defence  PSUs supplying various items to them.

- xiii. The process for export clearance has been streamlined and made transparent & online.
- xiv. 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.
- xv. Government  has  set  up  the  Technology  Development  Fund  (TDF)  to encourage  participation  of  public/private  industries  especially  MSMEs, through  provision  of  grants,  so  as  to  create  an  eco-system  for  enhancing cutting edge technology capability for defence applications.

(c)  &  (d) Export  of  military  equipment  and  services  to  any  foreign  country depends on their specific requirement at that particular time and is done after taking the concurrence of the Armed Forces and other stakeholders.  There are different channels utilised for promoting exports to friendly foreign countries.

[

A single  point  of  contact  between  India  and  US  has  been  identified  on  both sides to promote Defence trade.  Defence exports are also a significant part of the bilateral  discussions  and  negotiations.    Lines  of  credit  are  also  being  utilised  for promoting Defence exports.

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## ANNEXURE  REFERRED IN THE REPLY GIVEN IN PART (a) & (b) OF LOK SABHA UNSTARRED QUESTION NO.738 FOR ANSWER  ON 26.06.2019

## Status of Projects which have been accorded AIP

|   Sr No. | SHQ       | Name of Project                                                                                      |
|----------|-----------|------------------------------------------------------------------------------------------------------|
|        1 | Air Force | Chaff &flares                                                                                        |
|        2 | Air Force | Infrared Imaging Search &Track System (IRST)                                                         |
|        3 | Air Force | Advanced Self Protection Jammer (ASPJ) Pods and Radar Warning Receiver                               |
|        4 | Air Force | Foldable Fiberglass Mat (FFM) for Rapid Runway Repair                                                |
|        5 | Air Force | Aerial Fuse for Bomb                                                                                 |
|        6 | Air Force | 125 kg bomb (akin to MK-81 bomb) - Suo Moto                                                          |
|        7 | Air Force | 70 mmAir to Ground Rockets                                                                           |
|        8 | Air Force | Long Range Air to Air BVR Missile                                                                    |
|        9 | Air Force | On Board Oxygen Generation System (OBOGS) for fighter aircraft                                       |
|       10 | Air Force | Wing Drop tanks for Mirage 2000 aircraft.                                                            |
|       11 | Air Force | Inflatable Decoy                                                                                     |
|       12 | Army      | 125mm APFSDS for T-72 &T-90 Tank                                                                     |
|       13 | Army      | Assault Track Way- Cl 24                                                                             |
|       14 | Army      | MEAT (Maneuverable Expendable Aerial Target)                                                         |
|       15 | Army      | Night Fighting Control System for AGS-30 - Suo Moto                                                  |
|       16 | Army      | 155 MMTerminally Guided Munition (TGM)                                                               |
|       17 | Army      | 120mm Extended Range (ER) Guided Mortar Ammunition                                                   |
|       18 | Army      | Augmented reality (AR) based head Mounted display system                                             |
|       19 | Army      | Fuel Cell Based Battery Charger                                                                      |
|       20 | Army      | Rectifier Cum Accumulator For A Vehicles                                                             |
|       21 | Army      | 3rd Generation ATGM System - Suo Moto                                                                |
|       22 | Army      | Pre-fragmented programmable proximity fuzed ammunition                                               |
|       23 | Army      | RPAS Simulator - Suo Moto                                                                            |
|       24 | Army      | GPS/GIS based Minefield Recording System                                                             |
|       25 | Army      | Multi Role Precision Kill System- Suo Moto                                                           |
|       26 | Army      | Auxiliary Power Unit                                                                                 |
|       27 | Army      | BMP-2/2K Upgrade - Suo Moto                                                                          |
|       28 | Navy      | Effectors for Anti-Torpedo Countermeasure System                                                     |
|       29 | Navy      | Deep Sea Side Scan Sonar Towing Winch                                                                |
|       30 | Navy      | Upper Air sounding system (UASS)                                                                     |
|       31 | Navy      | Proximity, DA and Graze fuse for 76/62 SRGM with universal capability for 76-127mm Ammn.             |
|       32 | Navy      | Chaff Payloads for Kavach Rockets LRCR (Long Range Chaff Rockets), MRCR (Medium Range Chaff Rockets) |
|       33 | Navy      | Digital Beam forming based Satellite TV                                                              |
|       34 | Navy      | Three phase inverters                                                                                |
|       35 | Navy      | Expendable Underwater Target                                                                         |
|       36 | Navy      | High Speed Low Flying Target                                                                         |