Lok Sabha Question No. 355 (UNSTARRED), answered on 2021-02-03
Subject: Ease of Doing Business in Defence Manufacturing
Ministry: DEFENCE
Asked by: Rajyavardhan Singh Rathore

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

## LOK SABHA UNSTARRED QUESTION NO.355

TO BE ANSWERED ON 3 rd  February, 2021

## EASE OF DOING BUSINESS IN DEFENCE MANUFACTURING

## 355. COL. RAJYAVARDHAN RATHORE:

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

- (a) the measures taken to increase the ease of doing business in defence manufacturing and the average  time  taken  to  process  applications  for  industrial  licenses  for  defence  manufacturing under the Industries(Development and Regulation) Act, 1951 and Arms Rules,2016;
- (b) the total number of industrial license applications pending with the DIPP and the MoD along with  the  number  of  years  for  which  these  applications  have  been  pending  and  the  reasons therefor;
- (c)  whether  there  are  stipulated  timelines  for  completion  of  various  steps  in  the  license application procedure;
- (d) if so, the average time taken by the Standing Committee on Private Sector Participation in Defence Production to provide comments on license applications; and
- (e) whether the MoD is considering proposals to allow manufacturing of items for non-defence use  and  issuing  licenses  subsequently  for  defence  use  of  those  items  and  if  so,  the  details thereof?

## A    N    S    W    E    R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(SHRI SHRIPAD NAIK)

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

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## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  to  (e)  OF  LOK  SABHA UNSTARRED QUESTION NO. 355 FOR ANSWER ON 03.02.2021 REGARDING 'EASE OF DOING BUSINESS IN DEFENCE MANUFACTURING'.

- (a)    Following  measures  have  been  taken  up  by  Government  to  increase  the  ease  of  doing business in defence:
1.    The  initial  validity  of  industrial  licenses  under  the  I(D&R)  Act,  1951  which  was earlier 7 years, extendable up to 3 years for existing as well as future licenses, issued vide DPIIT Press Note 5 (2015 Series) dated 27.04.2015 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 life time of the 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.
2.  Guidelines have been issued to streamline the processing of applications for grant of extension of validity of Industrial Licence.
3.  Partial commencement of production is treated as commencement of production of all the items included in the licence.
4.    The  advanced  version  of  National  Industrial  Classification  (NIC-2008)  has  been adopted, which is a superior/sophisticated industrial classification.
5.  The 'Security Manual for Licensed Defence Industry' has been issued.  With the issue of the Security Manual, the requirement of affidavit from the applicants has been done away with.
6.  Restriction of annual capacity in the Industrial Licence for Defence Sector has been removed under Industries (Development & Regulation) Act, 1951.
7.  Licensee has been allowed to sell the defence items to the government entities under the  control  of  Ministry  of  Home  Affairs  (MHA),  Public  Sector  Undertakings  (PSUs), State Governments and other Defence Licensee companies without approval of Department of  Defence Production.
8.  Mapping of Sector specific FDI policy with NIC-2008 code has been completed and Press Note issued.
9.  Licensee has been allowed to manufacture enhanced capacity up to fifteen percent of the  existing  capacity  with  prior  intimation  to  the  licensing  authority  under  Arms  Act, 1959.

10.  A new online portal has been developed for facilitating filing of online applications for Industrial Licence under Industries (Development & Regulation)-IDR Act, 1951/Arms Act, 1959.  The link of the portal is https://services.dipp.gov.in.  This online portal is available for Public with effect from 16.10.2018 for filing applications.

11.    Subsequent  to  issue  of  MHA  Notification  No.  S.O.  6203(E)  dated  14.12.2018, Defence  products  list requiring  compulsory  licence  from  DPIIT  under  Industries (Development  &  Regulation)  Act,  1951  and  Arms  Act,  1959  has  been  pruned,    and DPIIT  Press  Note  1(2019  Series)  dated  01.01.2019  has  been    issued.    This  is  in supersession of  DPIIT Press Note 3(2014 Series) dated 26.06.2014.  With issue of Press Note 1(2019 Series), the licensing in defence sector has been further liberalized.

12.  To facilitate further ease of doing business in Industrial Licensing Press Note 2(2019 Series)  dated  11.09.2019  has  been  issued  clarifying  that  No  Industrial  Licence/Arms Licence is required for manufacture of any parts or accessories in Defence Sector, unless they are specifically listed in any of the Annexures of Press Note 1(2019 Series).  This shall not apply to issue of Arms Licence for small arms by MHA.

13.  Press Note 3(2019 Series) dated 11.09.2019 was issued thereby withdrawing Press Note 17(1984 Series).

14.    Final  notification  regarding  Amendment  in  the  Registration  and  Licensing  of Industrial  Undertaking  Rules,  1952  under  Industries  (Development  &  Regulation)  Act, 1951  was  published  vide  Notification  No.  G.S.R.  637(E)  dated  04.09.2019  and  the Registration  and  Licensing  of  Industrial  Undertaking  Rules,  2019  has  been  laid  on  the table of the Houses of Parliament in the Winter Session, 2019.

(b)  The License applications are processed in consultation with various stakeholders.  Currently, 28 License applications in MoD and 30 in Department for Promotion of Industry and Internal Trade (DPIIT) are under examination and stakeholders' consultation as per laid down procedure.

(c)  As per Registration and Licensing of Industrial Undertaking (Amendment) Rules, 2019 dated 04.09.2019  notified  by  Ministry  of  Commerce  &  Industry,  the  timeline  for  processing  the application is 5 months from the date of registration.

(d)    Meetings  of  Standing  Committee  on  Private  Sector  Participation  are  convened  at  regular intervals and comments are conveyed to Licensing Authorities.

(e)  No such proposal is under consideration in Department of Defence Production (DDP).

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