Lok Sabha Question No. 541 (UNSTARRED), answered on 2022-02-04
Subject: Self-reliance in Defence Manufacturing
Ministry: DEFENCE
Asked by: Khagen Murmu, Gowdar Mallikarjunappa Siddeshwara

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

## LOK SABHA UNSTARRED QUESTION NO. 541

TO BE ANSWERED ON 04 TH  FEBRUARY, 2022

## SELF-RELIANCE IN DEFENCE MANUFACTURING

541. SHRI KHAGEN MURMU: SHRI G.M. SIDDESHWAR:

Will the Minister of DEFENCE be pleased to state:

- (a) whether the Government has introduced any policies to promote self-reliance in defence manufacturing;
- (b) if so, the details of the major policies to ensure self-reliance in defence manufacturing;
- (c) the manner in which such policies affect imports of defence items; and
- (d) the other steps taken by the Government to upgrade and modernize defence technologies to meet the future requirements of the country?

## A  N  S  W  E  R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(SHRI AJAY BHATT)

(a) to (d): The Government has taken several policy initiatives and brought reforms to promote self-reliance  in  defence  manufacturing.  These  policy  initiatives  are  aimed  at  encouraging indigenous  design  & development,  innovation  and  manufacture  of  defence  equipment  in  the country, thereby reducing dependency on imports in long run. Important policy initiatives and reforms are as under: -

- i. DPP-2016 has been revised as Defence Acquisition Procedure (DAP)- 2020, which is driven by the tenets of Defence Reforms announced as part of 'Aatmanirbhar Bharat Abhiyan'.

- ii. In  order to  promote indigenous design and development of defence equipment 'Buy {Indian-IDDM (Indigenously Designed, Developed and Manufactured)}' category has been accorded top most priority for procurement of capital equipment.
- iii. Ministry  of  Defence  has  notified  'First  Positive  Indigenisation  list'  of  101  items  on 21 st Aug 2020 and '2 nd Positive Indigenisation list' of 108 items on 31 st May 2021 for which there would be an embargo on the import beyond the timelines indicated against them. This is a big step to promote indigenization in defence sector. This offers a great opportunity to the Indian defence industry to manufacture these items using their own design  and  development  capabilities  to  meet  the  requirements  of  the  Indian  Armed Forces. These lists include some high technology weapon systems like artillery guns, assault  rifles,  corvettes,  sonar  systems,  transport  aircrafts,  light  combat  helicopters (LCHs), radars, wheeled armoured platform, rockets, bombs, armoured command post vehicle,  armoured dozor  and  many  other  items  to  fulfill  the  needs  of  our  Defence Services.
- iv. Further,  the  Government  has  notified  a  Positive  Indigenization  list  of  sub-systems/ assemblies/ sub-assemblies/ components of DPSUs on 27 th December, 2021. The list contains  2500  items,  which  are  already  indigenized  and  351  items  for  which  there would be an embargo on import beyond the timelines indicated against them.
- v. The 'Make' Procedure of capital procurement which is aimed at encouraging design, development  and  manufacture  of  defence  products  by Indian private industry, primarily for import substitution, has been simplified. There is a provision for funding upto 70% of development cost by the Government to Indian industry under Make-I category.  In  addition,  there  are  specific  reservations  for  MSMEs  under  the  'Make' procedure.
- vi. Procedure  for  'Make-II'  category  (Industry  funded),  introduced  in  DPP  2016  to encourage  indigenous  development  and  manufacture  of  defence  equipment  has number  of  industry  friendly  provisions  such  as  relaxation  of  eligibility  criterion, minimal documentation, provision for considering proposals suggested by industry/individual etc. So far, 62 projects relating to Army, Navy & Air Force, have been accorded 'Approval in Principle'.
- vii. 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.

- viii. 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.
- ix. 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.
- x. An  indigenization  portal  namely  SRIJAN  has  been  launched  in  August  2020  for DPSUs/Services  with  an  industry  interface  to  provide  development  support  to MSMEs/Startups/Industry for import substitution. So far, 18023 Defence items, which were earlier imported, have been displayed on the portal.  The  Indian industry have shown their interest in 3826 items. Out of them, 3190 have already been indigenized.
- xi. 'Offset  portal'  has  been  launched  in  May  2019  to  ensure  Greater  transparency, efficiency  and  accountability  in  the  process.  Reforms  in  Offset  policy  have  been included in DAP  2020,  with  thrust on attracting investment and Transfer of Technology for Defence manufacturing, by assigning higher multipliers to them.
- xii. Government has notified the 'Strategic Partnership (SP)' Model in May 2017, which envisages  establishment  of  long-term  strategic  partnerships  with Indian  entities through a transparent and competitive process, wherein they may tie up with global Original  Equipment  Manufacturers  (OEMs)  to  seek  technology  transfers  to  set  up domestic manufacturing infrastructure and supply chains.
- xiii. 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.
- xiv. Government  has  established  two  Defence  Industrial  Corridors,  one  each  in  Uttar Pradesh and Tamil Nadu to attract investments of Rs 10,000 Cr in each corridor by year 2024-25. So far, investment of approx. Rs 3750 Cr in both the corridors by public and  private  sector  companies  have  been  made.  Moreover,  the  respective  State Governments  have  also  published  their  Aerospace  &  Defence  Policies  to  attract industries including foreign companies in these two corridors.

- xv. An Inter-Governmental Agreement (IGA) on 'Mutual Cooperation in Joint Manufacturing  of  Spares,  Components,  Aggregates  and  other  material  related  to Russian/Soviet  Origin Arms and Defence Equipment' was signed in Sep 2019. The objective of the IGA is to enhance the After Sales Support and operational availability of  Russian  origin  equipment  currently  in  service  in  Indian  Armed  Forces  by organizing  production  of  spares  and  components  in  the  territory  of  India  by  Indian Industry  by  way  of  creation  of  Joint  Ventures/Partnership  with  Russian  Original Equipment  Manufacturers  (OEMs)  under  the  framework  of  the  'Make  in  India' initiative.
- xvi. Defence Products list requiring Industrial Licences has been rationalised and manufacture of most of parts or components does not require Industrial License. The initial  validity  period  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 case-to-case basis.
- xvii. Defence Investor Cell (DIC) has been created in Feb-2018 by the Ministry to provide all necessary information including addressing queries related to investment opportunities, procedures and regulatory requirements for investment in the sector. Till date, 1325 queries had been received and addressed by Defence Investor Cell.

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