India towards self-reliant in Defence Production #Hindustan360

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The Defence Production Policy promulgated by the Government, aims at achieving substantive self-reliance in the design, development and production. View more at #Hindustan360.

Weapon systems, platforms required for defence in as early a time frame as possible, creating conditions conducive for private industry to take an active role in this endeavour; enhancing potential of Small and Medium Enterprises (SMEs) in indigenisation and broadening the defence R&D base of the country. In pursuance of this Policy and Make in India initiative, the steps taken by the Government, inter-alia include.

Defence Procurement Procedure (DPP) has been revised and has come into effect from 1st April 2016. A new category of procurement Buy {Indian-IDDM (Indigenously designed, developed and manufactured)} has been introduced in Defence Procurement Procedure-2016 which has been accorded top most priority for procurement of capital equipment. Besides this, preference has been accorded to Buy (Indian) and Buy and Make (Indian) categories of capital acquisition over Buy (Global) & Buy & Make (Global) categories.

The Make Procedure has been simplified with provisions for funding of 90% of development cost by the Government to Indian industry and reserving projects and exceeding development cost of INR 10 Crore (Government funded) and Rs. 3 crore (Industry funded) for MSMEs.

FDI Policy has been revised and under the revised policy, FDI upto 49% is allowed through automatic route and beyond 49% under Government approval route wherever it is likely to result in access to modern technology or for other reasons to be recorded.

Industrial licensing regime for Indian manufacturers has been liberalised and most of the components/ parts/ sub-systems have been taken out from the list of defence products requiring Industrial Licence. This has reduced entry barriers for new entrants in this sector, particularly SMEs. The initial validity of Industrial Licence has been increased from 3 years to 15 years with a provision to further extend it by 3 years on a case to case basis.

Issues related to level-playing field between Indian & foreign manufacturers, and between public sector & private sector have also been addressed. These include Exchange Rate Variation (ERV) protection for all Indian vendors, removing anomalies in customs/ excise duty etc.

Offset guidelines have been made flexible by allowing change of Indian Offset Partners (IOPs) and offset components, even in signed contracts. Foreign Original Equipment Manufacturers (OEMs) are now not required to indicate the details of IOPs and products at the time of signing of contracts. Services as an avenue of offset have been re-instated.

The process for export clearance has been streamlined and made transparent & online. As a result of aforesaid measures, following achievements have been made:-

Defence Acquisition Council (DAC) accorded approval of 136 capital procurement cases at an estimated cost of Rs. 4,00,714 crore during the last two financial years (2014-15 and 2015-16) and current year 2016-17 (upto January 2017), out of which 96 cases involving Rs. 2,46,417 crore are under the Buy (Indian-IDDM), Buy (Indian), Buy & Make (Indian) and Make categories.

Capital expenditure of Rs. 1,75,420 crore (approx.) was incurred on purchase of defence items for Armed Forces during the last two financial years (2014-2015 and 2015-2016 and current year 2016-2017 (upto December 2016), out of which Capital expenditure of Rs. 1,05,030 crore (approx.) was incurred on purchase from Indian vendors.

The Government has issued 342 Industrial Licenses (ILs) covering 205 companies for manufacture of a wide range of defence equipment, to Indian companies, till June 2016. Out of 342 ILs, 116 ILs have been issued since the launch of Make in India initiative.

This information was given by Minister of State for Defence Dr. Subhash Bhamre in a written reply to Shri Mahesh Poddar in Rajya Sabha today.

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