Lok Sabha Question No. 495 (UNSTARRED), answered on 2019-11-20
Subject: Defence Export
Ministry: DEFENCE
Asked by: Vellalath Kochukrishnan Nair. Sreekandan

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

## LOK SABHA UNSTARRED QUESTION NO.495

TO BE ANSWERED ON 20 th  November, 2019

## DEFENCE EXPORT

495. SHRI V.K. SREEKANDAN:

Will the Minister of DEFENCE be pleased to state:

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- (a) whether India's defence exports is likely to triple to Rs. 35,000 crore by 2024;
- (b) if so, the details thereof;
- (c) whether the Government is considering to lower bureaucratic barriers and simplify procedures to promote domestic defence manufacturing; and
- (d) if so, the details thereof?

## A    N    S    W    E    R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(SHRI SHRIPAD NAIK)

रक्षा राज्य मंत्री

( श्री श्रीपाद नाईक )

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- (a) & (b): Various reforms/steps have been taken to enhance Defence exports. These reforms  have  provided  a  big  boost  to  defence  exports  in  the  recent  times.  The authorisation for defence exports in the country have grown seven folds in the last two years. The steps taken to promote defence exports is at Annexure I .

- (c) & (d):  As per

Annexure II.

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## ANNEXURE-I REFERRED IN THE REPLY GIVEN IN PART (a) &  (b) OF LOK SABHA UNSTARRED QUESTION NO.495 FOR ANSWER  ON 20.11.2019

## Measures Taken By The Government To Promote Defence Exports

- (i) Special  Chemicals,  Organisms,  Materials,  Equipment  and  Technologies (SCOMET) Category 6 titled 'Munitions List' that was hitherto 'Reserved' has  been  populated  and  Military  Stores  list  notified  vide  Notification No.115(RE-2013)/2009-2014 dated 13th March 2015 stands rescinded.
- (ii) The  Director  General  of  Foreign  Trade  (DGFT)  vide  Public  Notice  No. 4/2015-20 dated 24th April, 2017, notified Department of Defence Production(DDP) as the Licensing Authority for export items in Category 6 of SCOMET. The export of items specified in Category 6 (Munitions List) except those covered under Notes 2 & 3 of Commodity Identification Note (CIN)  of  the  SCOMET  is  now  governed  by  the  Standard  Operating Procedure issued by the Department of Defence Production (DDP), Ministry of Defence.
- (iii) Standard Operating Procedure (SOP) for the export of munitions list items has been modified and placed on the website of the DDP.
- (iv) 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 authorisation issued is also digitally signed.
- (v) In repeat orders of same product to the same entity, consultation process has been done away with and permission is issued immediately.For the repeat order of same product to different entity, the consultation earlier done with all stakeholders is now limited only with MEA.
- (vi) In Intra-Company business (which is especially relevant for outsourcing of work by defence related parent company abroad to its subsidiary in India), the  earlier  requirement  of  getting  End  User  Certificate  (EUC)  from  the Government of importing country  has  been  done  away  with  and  'Buying' Company is authorized to issue the EUC.
- (vii) The legitimate export of the parts and components of small arms and body armour for civil  use  are  now  being  permitted  after  prior  consultation  with MEA.
- (viii) For export of items for exhibition purposes, the requirement of  consultation with stakeholders has been done way with (except for select countries).

- (ix) Powers have been delegated to DRDO, DGOF, and CMD's of DPSUs for exploring export opportunities and participation in global tenders.
- (x) New  End  User  Certificate  Format  for  Parts  &  Components  has  been provided in SOP.
- (xi) Validity of Export Authorization has been increased for 02 years to date of completion of order/component whichever is later.
- (xii) A  new  provision  for  re-exporting  parts  and  components  for  undertaking repair  or  rework  to  provide  replacement  for  a  component  under  warranty obligation is inserted in the SOP as a sub-classification of repeat orders.
- (xiii) MHA  vide  Notification  dated  1.11.2018  has  delegated  its  powers  to  this Department to  issue  export  license  under  Arms  Rules  2016  in  Form  X-A, for parts & components of small  arms. With this the Department of Defence Production  becomes  the  single  point  of  contact  for  exporter  for  export  of parts and components of Small Arms & Ammunitions.
- (xiv) The Government has notified the Open General Export License (OGEL)  -  a one time export license, which permits the industry to export specified items to specified destinations, enumerated in the OGEL, without seeking export authorisation during the validity of the OGEL.
- (xv) 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  Govt.  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.
- (xvi) 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.
- (xvii) A Scheme to provide  financial  support  to  Defence  Attaches  for  taking  up actions  for  promoting  exports  of  Indian  made  defence  products  both  of public and private sector in the countries to which they are attached has been notified.

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## ANNEXURE-II REFERRED IN THE REPLY GIVEN IN PART (c) & (d) OF LOK SABHA UNSTARRED QUESTION NO.495 FOR ANSWER  ON 20.11.2019

## Measures Taken To Simplify Procedures To Promote Domestic Defence Manufacturing

- (i) 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)  up  to  26%  both  subject  to  licensing.    Further, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry vide Press Note No. 5 (2016 Series), has allowed FDI under automatic route upto 49% and above  49%  through  government  route  wherever  it  is  likely  to  result  in  access  to modern technology or for other reasons to be recorded.
- (ii) The  initial  validity  of  industrial  licenses  under  I(D&R)  Act,  1951  has  been revised to 15  years,  further  extendable  up  to  18  years  for  existing  as  well  as  future licenses vide Press Note 10(2015 Series) dated 22.09.2015. Further, under Arms Act, 1959/Arms  Rules  2016,  license  granted  shall  be  valid  for  the  lifetime  of  licensee company  provided  the  licensee  shall  be  required  to  setup  facility  and  fulfill  other conditions within a period of seven years from the date of grant of a license.
- (iii) Based on the initiative taken by Department of Defence Production to review Defence  Product  List  for  the  liberalization  in  defence  manufacturing  sector,  the Defence Product List has got rationalized and trimmed.
- (iv) So far, government has issued 452 licenses for manufacture of a wide range of defence  items  to  Indian  companies.  Further,  42  FDI  proposals/Joint  Ventures  have been  approved  for  manufacture  of  various  defence  equipments,  both  in  public  and private sector.

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