Lok Sabha Question No. 677 (UNSTARRED), answered on 2019-11-20
Subject: Offset Contracts from Defence Sector
Ministry: DEFENCE
Asked by: Sambhajirao Mane Dhairyasheel, Shrikant Eknath Shinde, Sujay Radhakrishna Vikhepatil

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

## LOK SABHA UNSTARRED QUESTION NO.677

TO BE ANSWERED ON 20 th  November, 2019

## OFFSET CONTRACTS FROM DEFENCE SECTOR

677. SHRI DHAIRYASHEEL SAMBHAJIRAO MANE: DR. SHRIKANT EKNATH SHINDE: DR. SUJAY RADHAKRISHNA VIKHE PATIL:

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

- (a) the details of offset contracts from Defence sector by Government during the last three years;
- (b) whether Government has conducted or is aware of any study, on the ways in which the offset contracts have benefited Indian manufacturers and if so, the details thereof;
- (c) whether India has been able to develop a strong manufacturing industry to invest Foreign Direct Investment (FDI) in the sector and if so, the details thereof;
- (d) the total FDI inflow in Defence sector during the last three years; and
- (e)  the  status  of  all  defence  projects  undertaken  under  the  Make-in-India-Initiative during the last three years and the current year?

## 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)    21  defence  offset  contracts  with  cumulative  value  of  5.67  Billion  US  Dollars approximately have been signed by Ministry of Defence (MoD) in last three years.

(b)   A study on impact of offsets on Defence Industrial Base has been conducted by Department of Defence Production through Institute for Defence Studies and Analysis (IDSA).    According  to  the  study  conducted,  till  March  2019,  MoD  has  signed  52 Offset contracts valued at 11.79 Billion US Dollars to be discharged through Indian Offset Partners.

(c) & (d):  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, Development  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.  Since the opening of private sector participation in defence production in 2001, 452 Industrial Licenses (ILs) have been issued till October 2019 for manufacture of a wide range of defence items, out of which a total of 109 licenses have been issued in the last three financial years.

Further,  so  far  FDI  amounting  to  Rs.1812  crores  has  been  reported  by  the companies in the Defence and Aerospace Sector since April 2014.

(e)    Separate  procedure  for  'Make-II'  category  has  been  notified  under  Defence Procurement Procedure (DPP) to encourage indigenous development and manufacture of defence equipment.  Till date, 44 proposals for development by industry have been given 'In-principle' approval under Make-II.

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