Lok Sabha Question No. 946 (UNSTARRED), answered on 2021-12-03
Subject: Defence Industrial Corridors
Ministry: DEFENCE
Asked by: Rebati Tripura, Geetha Viswanath Vanga, Kotha Prabhakar  Reddy

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

## LOK SABHA UNSTARRED QUESTION NO.946

TO BE ANSWERED ON 3 rd  DECEMBER, 2021

## DEFENCE INDUSTRIAL CORRIDORS

946. SHRI REBATI TRIPURA:

SHRIMATI VANGA GEETHA VISWANATH:

SHRI KOTHA PRABHAKAR REDDY:

Will the Minister of DEFENCE be pleased to state:

- (a) whether the Government has decided to set up defence industrial corridors in the country for defence equipment production;
- (b)  if  so,  the  details  of  the  locations  where  the  said  corridors  are  to  be  set  up  along  with  the amount of funds estimated to be spent thereon;
- (c)  whether  some  State  Governments  including  Andhra  Pradesh  and  Telangana  have  sent proposal  to  the  Union  Government  for  seeking  assistance  for  setting  up  defence  industrial corridors;
- (d) if so, the details thereof and the action taken thereon; and
- (e)  whether the Government has taken steps to promote 'Aatmanirbhar Bharat' in the defence sector, if so, the details thereof?

## A    N    S    W    E    R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(SHRI AJAY BHATT)

(a) & (b) In the General Budget 2018-19, Central Government announced setting up of 02(two) Defence Industrial Corridors (DICs) in the country. In pursuance of the said announcement, it was further decided to set up one of these Corridors in Uttar Pradesh (UP) and another in Tamil

Nadu  (TN).  Subsequently,  six  nodes,  namely  Aligarh,  Agra,  Chitrakoot,  Jhansi,  Kanpur  and Lucknow were identified for Uttar Pradesh Defence Industrial Corridor (UPDIC) and five nodes, namely  Chennai,  Coimbatore,  Hosur,  Salem  and  Tiruchirappalli  for  Tamil  Nadu  Defence Industrial Corridor (TNDIC).Defence Industrial Corridors (DICs) are aimed at providing fillip to the defence  manufacturing ecosystem  in  both  States  and  attract  investment  worth  Rs.  10,000 Crore  in  each  of  the  DICs  by  the  year  2024-25.  The  respective  State  Governments  provide necessary lands, connectivity and basic infrastructure for the DIC.

(c)  &  (d):  Subsequently,  Government  of  India  has  received  proposals  from  08(eight)  State Governments, including Telangana for setting up of Defence Industrial Corridors (DICs) in their States.    No  proposal  has  been  received  from  the  State  of  Andhra  Pradesh.    The  two  defence corridors are intended to provide a fillip to strengthening the defence manufacturing ecosystem in India including all States.

(e) The Government has taken following steps to promote 'Atmanirbhar Bharat' in the defence sector:

- i. Defence  Procurement  Procedure  (DPP)-2016  was  revised  as  Defence  Acquisition Procedure (DAP) - 2020, which is driven by the tenets of Defence Reforms announced as part  of  'Aatmanirbhar  Bharat  Abhiyan'.  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.  The  'Make'  Procedure  of  capital  procurement  has been simplified. There is a provision for funding up to 70% of development cost by the Government  to  Indian  industry  under  Make-I  category,  whereas  Make-II  procedure provides  assurance  to  the  industry  for  procurement.  In  addition,  there  are  specific preferences for MSMEs under the 'Make' procedure.
- ii. Ministry of Defence has notified two 'Positive Indigenisation Lists (PILs)' with total 209 items for which there would be an embargo on the import beyond the timeline indicated against  each  of  them,  offering  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 Armed Forces in the coming years.
- iii. Ministry  of  Defence  has  earmarked  about  64  per  cent  of  its  modernisation  funds amounting to almost Rs 71,000 crore under the capital acquisition budget for 2021-22 for procurement from the domestic industries.

- iv. The Government of India has enhanced FDI limit 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.
- v. An  innovation  ecosystem  for  Defence,  namely  'Innovations  for  Defence  Excellence (iDEX)'was launched in April, 2018. iDEX aims 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.
- vi. An  indigenization  portal,  namely  SRIJAN,  has  been  launched  in  August  2020  for DPSUs/Services with an industry interface to provide development support to MSMEs/Start-ups/Industry for import substitution. As of today, 16583 items have been uploaded for indigenisation. Out of them, 2709 items have been indigenised.
- vii. Defence products list requiring Industrial Licences has been rationalised and manufacture of  several  parts  or  components  are  delicensed.  The  initial  validity  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 a case-to-case basis. A new online portal has been developed for facilitating filing of online applications for Industrial License under Industries (Development & Regulation) Act - IDR Act 1951/Arms Act 1959.
- viii. Government has established two Defence Industrial Corridors, one each in Uttar Pradesh and Tamil Nadu. It has been envisaged to attract total investments of Rs 20,000 Crore in the  two  Defence  Industrial  Corridors  of  Uttar  Pradesh  and  Tamil  Nadu  by  the  year 2024-25.  The  respective  State  Governments  have  also  published  their  Aerospace  & Defence  Policies  to  attract  and  facilitate  private  players  as  well  as  foreign  companies including  Original  Equipment  Manufacturers  (OEMs)  for  investments  in  these  two corridors.
- ix. '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.

- x. Defence Investor Cell (DIC) has been created in February, 2018 in Ministry of Defence to provide all necessary information including addressing queries related to investment opportunities, procedures and regulatory requirements for investment in the sector.
- xi. 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  would  tie  up  with  global  Original Equipment  Manufacturers  (OEMs)  to  seek  technology  transfers  to  set  up  domestic manufacturing infrastructure and supply chains.
- xii. 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 September, 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.

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