Lok Sabha Question No. 2548 (UNSTARRED), answered on 2021-08-04
Subject: Boosting Domestic Production of Defence Equipment
Ministry: DEFENCE
Asked by: Rajiv Pratap Rudy

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

## LOK SABHA

## UNSTARRED QUESTION NO.2548

TO BE ANSWERED ON 4 th  August, 2021

## BOOSTING DOMESTIC PRODUCTION OF DEFENCE EQUIPMENT

## 2548. SHRI RAJIV PRATAP RUDY:

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

- (a)  whether  the  Government  has  been  successful  in  boosting  domestic  production  of defence equipment under the 'Make in India' scheme;
- (b) if so, the details thereof and if not, the reasons therefor;
- (c) whether the Government has taken/is taking any steps/measures to boost production of Defence Equipment in the country and if so, the details thereof;
- (d) whether the country's Defence imports are likely to reduce in the next three years as a result of those steps/measures, if so, the details thereof and if not, the reasons therefor; and
- (e) the details of the imports and exports made by the Government in the Defence sector during the last five years, year-wise?

## A    N    S    W    E    R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(a) to (e):  A statement is attached.

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(SHRI AJAY BHATT)

## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (e)  OF  LOK SABHA  UNSTARRED  QUESTION  NO.  2548  FOR  ANSWER  ON  04.08.2021 REGARDING 'BOOSTING DOMESTIC PRODUCTION OF DEFENCE EQUIPMENT'.

(a)  to  (c): The Government has taken several policy initiatives  and brought reforms to encourage indigenous design, development and manufacture of defence equipment in the country,  thereby  reducing  dependency  on  imports  in  coming  years.  These  initiatives, inter-alia,  include  according  priority  to  procurement  of  capital  items  from  domestic sources  under  Defence  Acquisition  Procedure  (DAP)-2020;    Notification  of    two 'Positive Indigenisation Lists' of total 209 items for which there would be an embargo on the  import  beyond  the  timeline  indicated  against  them;  Simplification  of  Industrial licensing process with longer validity period; Liberalisation of FDI policy allowing 74% FDI under automatic route; Simplification of Make Procedure; Launch of Innovations for Defence Excellence (iDEX) scheme involving start-ups & MSMEs; Implementation of 'Public Procurement (Preference to Make  in India), Order 2017'; Launch of an indigenization  portal  namely  SRIJAN  to  facilitate  indigenisation  by  Indian  Industry including  MSMEs;  Reforms  in  Offset  policy  with  thrust  on  attracting  investment  and Transfer  of  Technology  for  Defence  manufacturing  by  assigning  higher  multipliers; Establishment of two Defence Industrial Corridors one each in Uttar Pradesh and Tamil Nadu.

In  addition,  for  2021-22,  the  allocation  for  Domestic  procurement  has  been enhanced  compared  to  previous  years  and  is  planned  to  be  about  64.09  %  i.e. Rs. 71,438.36 Crore of the allocated amount for military modernization.

Further,  year-wise  annual  Turnover  of  Ordnance  Factory  Board  (OFB),  09 Defence  Public  Sector  Undertakings  (PSUs),  06  other  PSUs  &  37  private  companies manufacturing defence items, indicates the impact of measures taken by the Government to make successful 'Make in India'. The year-wise details of annual Turnover of these units are as below:

| Financial Year   |   Total Value in Rs Crore |
|------------------|---------------------------|
| 2016-2017        |                     74054 |
| 2017-2018        |                     78820 |
| 2018-2019        |                     81121 |
| 2019-2020        |                     78569 |
| 2020-2021        |                     84694 |

(d)& (e):  The measures taken by Government for Indigenisation are likely to result in import  substitution.  On  the  basis  of  data  received  from  Controller  General  of  Defence Accounts (CGDA), the details of procurement of defence equipment (both  Capital  and Revenue) by the three Services (Army, Navy and Air Force), in the last three years which indicates decrease in imports, are as follows:

(Value in Rs Crore)

| Year      |   Total expenditure on Procurement (both capital and revenue) |   Expenditure on Procurement (both capital and revenue) from Domestic sources |   %age of expenditure on Procurement (both capital and revenue) from Domestic sources |
|-----------|---------------------------------------------------------------|-------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|
| 2018-2019 |                                                         93474 |                                                                         50500 |                                                                                  54   |
| 2019-2020 |                                                        108340 |                                                                         63722 |                                                                                  58.8 |
| 2020-2021 |                                                        139341 |                                                                         88632 |                                                                                  63.3 |

Further.  the  details  of  procurement  of  defence  equipment  (both  Capital  and  Revenue) done from foreign sources by the three Services ( Army ,Navy and Air Force) , in the last five years are as follows:

(Value in Rs Crore)

| Year            | Expenditure on Procurement (both capital and revenue) from Foreign sources   |
|-----------------|------------------------------------------------------------------------------|
| 30494           |                                                                              |
| 33413           | 2017-2018                                                                    |
| 42974           | 2018-2019                                                                    |
| 2019-2020 44618 |                                                                              |
| 2020-2021       | 50709                                                                        |

Moreover,  value  of  Export  Authorization  issued  by  Department  of  Defence Production to DPSUs/OFB and Private companies, during the last five years has been as under:

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|                                               |   2016-17 |   2017-18 |   2018-19 |   2019-20 |   2020-21 |
|-----------------------------------------------|-----------|-----------|-----------|-----------|-----------|
| Value of Export Authorisation (Rs. in Crores) |   1521.91 |   4682.36 |   10745.8 |   9115.55 |   8434.84 |