Lok Sabha Question No. 2278 (UNSTARRED), answered on 2022-07-29
Subject: Military Spending
Ministry: DEFENCE
Asked by: Nusrat Jahan Ruhi

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE DEPARTMENT OF DEFENCE

## LOK SABHA UNSTARRED QUESTION NO. 2278

TO BE ANSWERED ON 29 th  July, 2022

## MILITARY SPENDING

2278. SHRIMATI NUSRAT JAHAN RUHI:

Will the Minister of DEFENCE be pleased to state:

- (a)  whether India's military spending is ranked as third highest in the world and if so, the details thereof;
- (b)  whether  during  2017  to  2021,  more  than  50percent  of  defence  equipment  has  been imported; and
- (c) if so, the details thereof along with the development and present status of 'Make in India' scheme being implemented in the defence sector?

## A  N  S  W  E  R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(SHRI AJAY BHATT)

- (a):    This  Ministry  does not maintain expenditure data of  other countries. However, as per data available on Stockholm International Peace Research Institute (SIPRI)'s website, India's Military spending for the year 2021 isranked as third highest in the world as detailed below:

(in Current US $ Million)

|   S.No. | Country                  | Expenditure for 2021   |
|---------|--------------------------|------------------------|
|       1 | United States of America | 800,672.20             |
|       2 | China                    | 293,351.90             |
|       3 | India                    | 76,598.00              |

- (b):    No,  Sir.  During  2017-21,  the  percentage  of  Foreign  Procurement  (both  Revenue  and Capital) made for purchase of Stores/ Defence Equipment has been in the range of 33.97% 41.60%.
- (c):  The present status of 'Make in India' in Defence Manufacturing is listed below:
- (i) 18  major  platforms  have  been  approved  by  the  Ministry  of  Defence  for industry led Design & Development under Make I, Make II, SPV Model and iDEX routes.

- (ii) The share of domestic procurement in the total procurement has been on an uptrend.  In  2018-19,  the  domestic  procurement  stood  at  54%  of  the  total procurement, this figure jumped to 59% in 2019-20 and to 64% in 2020-21. This year it is targeted to further increase the share of domestic procurement to 68%.
- (iii) An innovation ecosystem for Defence titled Innovations for Defence Excellence (iDEX) has been launched in April 2018 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.  So  far,  125  problems  have  been  opened,  136  startups  have  been engaged, 95 contracts have been signed.
- (iv) 'iDEX Prime' framework under iDEX has been launched in 2022 to support start-ups  with  Grant-in-Aid  uptoRs  10  Crore  to  enable  the  development  of high end solutions.
- (v) The Government has also approved a Scheme with an outlay of  Rs. 498.78 Crore  (2021-22  to  2025-26)  to  push  innovation  and  support  startups  in Defence  &  Aerospace  sector.  This  will  enable  more  than  300  startups  to participate  in  the  new  design  and  development projects  and  also  support  20 partner incubators.
- (vi) As part of the efforts to achieve self-reliance in Defence manufacturing and minimize  imports  by  the  DPSUs,  a  positive  indigenization  list  has  been notified by the Department. The list contains 2,500 imported items which have already  been  indigenized  and  351  high  value  imported  items  which  will  be indigenized in next 3 years.  Out of 351 items, 147 items have already been indigenised.
- (vii) Another  list  of  DPSUs  for  indigenization  of  107  Line  Replaceable  Units (LRUs)/Sub-systems of high value platform was notified on 28.03.2022. As on date, 4 LRUs have been indigenized; 5 LRUs are at trial stage and 31 LRUs are at design and development stage.
- (viii) An indigenization portal namely SRIJAN has been launched in August 2020 for  DPSUs/OFB/Services  with  an  industry  interface  to  provide  development support to MSMEs/Startups/Industry for import substitution. So far, more than 21000 Defence items, which were earlier imported, have been displayed on the portal. 388 private vendors have expressed interest in indigenising more than 4700 items and so far 410 items have been indigenized.
- (ix) Separate procedure for 'Make-II' category (Industry funded) has been notified to encourage indigenous development and manufacture of defence equipment. Number  of  industry  friendly  provisions  such  as  relaxation  of  eligibility criterion, minimal documentation, provision for considering proposals suggested by industry/individual etc. has been introduced in this procedure. So far,  72  projects  relating  to  Army,  Navy  &  Air  Force,  have  been  accorded 'Approval in  Principle'.  38 Acceptance  of  Necessity  (AONs),  05  prototypes developed and 2 procurement contracts have been signed by the Services.

- (x) Defence Products list requiring Industrial Licenses has been rationalized and manufacture  of  most  of  parts  or  components  does  not  require  Industrial License. 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.
- (xi) Defence  Testing  Infrastructure  Scheme  (DTIS)  has  been  formulated  for creating 6 to 8 Greenfield Defence Testing Infrastructures in the country. The scheme  would  help  in  achieving  'Atmanirbharta'  in  the  Defence  Testing Infrastructure for the domestic industry.
- (xii) To  provide  autonomy  and  enhance  efficiency,  and  unleash  new  growth potential  in  Ordnance  Factories,  the  Ordnance  Factory  Board  has  been corporatized  and  converted  into  7  new  Defence  Public  Sector  Undertakings while  safeguarding  the  interest  of  all  stakeholders.  The  new  Defence  PSUs have become operational from 1 st October, 2021.
- (xiii) FDI policy has been liberalized  with 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 or for other reasons to be recorded. Significant FDI inflows in Defence and Aerospace sector have been witnessed in last 7 years. From 2001 to 2014 in 14 years, FDI flow was reported worth Rs.  1382  Crore.  In  last  7  years  (2014-15  till  date),  the  FDI  inflow  has increased by almost 2.5 times, which in absolute terms is Rs.3378 Crores.
- (xiv) Government  has  established  two  Defence  Industrial  Corridors,  one  each  in Uttar  Pradesh  and  Tamil  Nadu  to  attract  investments  in  D&A  sector  and establish  a  comprehensive  defence  manufacturing  ecosystem  in  the  country. Moreover, the respective State Governments  have  also published their Aerospace  &  Defence  Policies  to  attract  private  players  as  well  as  foreign companies including Original Equipment Manufacturers (OEMs) in these two corridors.

| Parameters                      | TNDIC      | UPDIC     |
|---------------------------------|------------|-----------|
| Investment (value in Rs. Crore) | 3176       | 1767      |
| Land Acquisition (In Hectare)   | 910        | 1598      |
| MoU signed (value in Rs. Crore) | 41 (11108) | 84 (9756) |

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