Lok Sabha Question No. 607 (UNSTARRED), answered on 2022-02-04
Subject: Indigenous Manufacturing in Defence Sector
Ministry: DEFENCE
Asked by: P.R. Natarajan

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

## LOK SABHA UNSTARRED QUESTION NO. 607

TO BE ANSWERED ON 04 TH  FEBRUARY, 2022

## INDIGENOUS MANUFACTURING IN DEFENCE SECTOR

607. SHRI NATARAJAN P.R.:

Will the Minister of DEFENCE be pleased to state:

- (a) whether the Government has taken any policy decision to promote indigenous manufacturing in defence sector for reducing the import bill;
- (b) if so, the details thereof;
- (c) the details regarding percentage of private investment and cap on Foreign Direct Investment (FDI) in the defence sector;
- (d) whether the Government has undertaken any analysis on its impact on the safety of internal security of our nation; and
- (e) if so, the details thereof?

## A  N  S  W  E  R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(SHRI AJAY BHATT)

(a) & (b): The Government has taken several policy initiatives in past few years   and brought reforms to encourage indigenous design, development and manufacture of defence equipment in the country, thereby reducing dependence on imports in coming years. These initiatives, interalia,  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 of Services and  another 'Positive Indigenisation List' of total 2851 items  of DPSUs,  for  which  there  would  be  an  embargo  on  the  import  beyond  the  timelines  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 startups & MSMEs; Implementation of 'Public Procurement (Preference to Make in India), Order 2017;' Launch  of  the  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.

(c)  to  (e):  Defence  Industry  sector  was  opened  up  in  May  2001  upto  100% for  Indian  private sector participation. The Government of India has enhanced FDI in Defence Sector up to 74% through  the  Automatic  Route  for  companies  seeking  new defence  industrial  license  and  up  to 100% by Government Route wherever it is likely to result in access to modern technology. As per the provisions of FDI policy in Defence sector, foreign investment in the sector is subject to security clearance by the Ministry of Home Affairs. Further, foreign Investments in the Defence Sector are also subject to scrutiny on grounds of National Security and Government reserves the right to review any foreign investment in the Defence Sector that affects or may affect national security.

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