Lok Sabha Question No. 1407 (UNSTARRED), answered on 2021-02-10
Subject: Startups in Defence Production
Ministry: DEFENCE
Asked by: Unmesh Bhaiyyasaheb Patil, Sujay Radhakrishna Vikhepatil, Heena Vijaykumar Gavit, Sambhajirao Mane Dhairyasheel, Shrikant Eknath Shinde

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

## LOK SABHA UNSTARRED QUESTION NO.1407

TO BE ANSWERED ON 10 th  February, 2021

## STARTUPS IN DEFENCE PRODUCTION

1407. SHRI UNMESH BHAIYYASAHEB PATIL:

DR. SUJAY RADHAKRISHNA VIKHEPATIL:

DR. HEENA GAVIT:

SHRI DHAIRYASHEEL SAMBHAJIRAO MANE:

DR. SHRIKANT EKNATH SHINDE:

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

- (a)  whether  the  Government has seen a surge in startups dealing with defence production and indigenisation of imported equipment in the last three years;
- (b)  if  so,  whether  the  Government  has  been  working  to  remove  entry  barriers  for  startups  in defence domain;
- (c)  if  so,  the  details  thereof  along  with  the  financial  or  any  other  assistance  provided  to  these startups during the last three years;
- (d)  whether  any  challenges  are  being  faced  by  the  Government  in  boosting  defence  related startups, if so, the details thereof; and
- (e) the manner in which the Government plans to address there challenges?

## 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 THE REPLY TO PARTS (a) TO (e) OF LOK SABHA UNSTARRED  QUESTION  NO.  1407  FOR  ANSWER  ON  10.02.2021  REGARDING 'STARTUPS IN DEFENCE PRODUCTION'

- (a)  Yes, Sir

(b)  to (e): The following initiatives have been taken by the Government to remove entry barriers for private industry including start-ups in the defence domain:

1. Innovations  for  Defence  Excellence  (iDEX)  framework,  was  launched  in  April,  2018, with  the  aim  for  achieving  self-reliance  and  to  foster  innovation  and  technology development in Defence and Aerospace by engaging Industries including Micro, Small & Medium  Enterprises  (MSMEs),  startups,  individual  innovators,  R&D  institutes  and academia. Under iDEX, the projects or problem statements are identified based on the requirements projected by the Armed Forces, OFB & DPSUs. The selected applicants are eligible for grants upto Rs. 1.50 Crore for development of the prototypes.
2. In  the  Defence  Acquisition  Procedure  (DAP) 2020,  the Capital  Acquisition  cases  with Acceptance of Necessity (AoN) cost not exceeding Rs. 100 Crore have been reserved for MSMEs, provided there are at least two or more MSMEs eligible to participate in the category.
3. Projects under the 'Make' categories, with procurement not exceeding Rs. 100 Crore/year based on delivery schedule at the time of seeking AoN have been earmarked for MSMEs.
4. The 'Make-II' procedure has been simplified to encourage wider participation of Indian industry,  with  impetus  on  MSMEs/startups and timely induction of  equipment into the Indian  Armed  Forces.  The  'Startups'  recognized  by  the  Department  for  Promotion  of Industry and Internal Trade (DPIIT) from time to time, are eligible to participate under 'Make-II'  procedure.  In  addition,  the  framework  for  implementation  of  'Make-II'  at Ordnance  Factory  Board  (OFB)  and  Defence  Public  Sector  Undertaking  (DPSU)  level has also been notified. More than 2500 items have been notified by OFB and DPSUs for development under 'Make-II'.
5. Department of Defence Production (DDP) has notified 46 items under the latest Public Procurement Order 2017 notified by DPIIT, for which there is sufficient local capacity and competition and procurement of these items shall be done from local suppliers only irrespective of the purchase value.
6. The Government has notified a 'Policy for indigenisation of components and spares used in  Defence Platforms' in March, 2019 with the objective to create a domestic industry ecosystem.

7. Industrial licensing regime  for Indian manufacturers  in Defence  sector  has  been liberalized. This has reduced entry barriers for new entrants in defence sector, particularly SMEs.
8. The Government has enhanced Foreign Direct Investment (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. The obligatory government approval for existing  FDI  approval  holders  /  current  defence  licensees  for  change  in  equity  / shareholding pattern up to 49% FDI has been replaced with mandatory declaration for the same within 30 days of change of equity / shareholding pattern. The proposals for raising FDI  beyond  49%  from  such  companies  could  also  be  considered  with  Government approval.
9. Defence  Research  &  Development  Organisation  (DRDO)  has  evolved  a  new  industry friendly Transfer of Technology  (ToT)  policy for transfer  of  DRDO  developed technologies  to  industries.  DRDO has  also  promulgated  new  patent  policy  to  facilitate Indian industries to get free access to use DRDO patents.
10. DRDO has  launched  a  program  termed  as  Technology  Development  Fund  (TDF)  for meeting the requirements of Tri-Services, Defence Production and DRDO. The scheme has  been  established  to  promote  self-reliance  in  Defence  Technology  as  a  part  of  the 'Make  in  India'  initiative  by  encouraging  participation  of  public/private  industries especially MSMEs, including startups.
11. A Defence Investor Cell (DIC) was set up by the Department of Defence Production in January, 2018 to provide help, support  and  guidance to defence industry, MSMEs and startups.
12. During  2017-2018,  DDP  had  notified  275  items  which  were  previously  exclusively sourced from OFB, for sourcing from open industry and 141 items have been placed on Government e-Marketplace (GeM).
13. Testing  facilities:  The  Test  facilities/  infrastructure  available  with  various  Government agencies  (OFB,  DPSUs,  DRDO,  Directorate  General  Quality  Assurance  (DGQA), Directorate  General  of  Aeronautical  Quality  Assurance  (DGAQA)  &  Service  Head Quarters (SHQs)) have been made available to private sector with the objective to assist them  in  design  &  development  of  defence  systems.  The  details  of  test  facilities, procedure  and  other  'Terms  &  Conditions'  are  available  on  websites  of  the  respective Government Agencies.

14. 'Third Party Inspection (TPI) of Defence Stores: To align with the Government of India initiative to promote Ease of Doing Business for MSMEs and private sector and achieve national vision of "Make in India", the Department has formulated Policy Document on 'Utilisation of Third Party Inspection Services' for effective administration of inspection function of out-sourced work with involvement of third parties for inspection services.
15. Mission Raksha Gyan Shakti: This Mission was launched with the objective to encourage Intellectual Property Rights (IPR) for self-reliance in defence. IPR is the key enabler for developing an ecosystem of innovation and indigenization. As a part of Mission Raksha Gyan Shakti, an IPR Division has been constituted in DDP.
16. 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.

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