‘Self-reliance’ has been a significant goal in defence production. Towards this end the Government has so far taken the following steps:
- The defence manufacturing sector was earlier reserved for the public sector only. In May, 2001 the Central Government opened it for participation by the private sector to the extent of 100%, with Foreign Direct Investment permissible up to 26% both subject to licensing. The Department of Industrial Policy and Promotion has notified detailed guidelines for licensing production of arms and ammunition. So far 135 licenses have been issued to 75 companies in the private sector.The
- Defence Public Sector Undertakings (DPSUs) and Ordnance Factories have been upgrading and modernizing their plants to upgrade their production capacities.
- DPSUs and Ordnance Factories have been advised to invest significantly in Research and Development (R&D) efforts.
- The Defence Procurement Procedure – 2008 (DPP-2008) provides for the following categories of purchases / acquisition of defence equipment for boosting indigenous production of defence goods:
- ‘Buy (Indian)’ means buying from Indian vendors only. In this case where the systems are integrated by an Indian vendor, a minimum of 30% indigenous content is required.
- ‘Buy & Make’: Means purchase from a foreign vendor followed by licensed production / indigenous manufacture in the country.
- Make’ – high technology complex systems to be designed, developed and produced indigenously.
- ‘Buy & Make (Indian)’ means purchase from an Indian vendor, including an Indian company forming joint venture / establishing production arrangement with the Original Equipment Manufacturer (OEM) followed by licensed production/indigenous manufacture in India. ‘Buy & Make (Indian)’ must have a minimum 50% indigenous content on cost basis.
- Cases where capital acquisitions under ‘Buy (Global)’ or ‘Buy and Make with Transfer of Technology’ with foreign vendors are for more than Rs. 300 crore, the ‘Offset’ clause gets invoked. The minimum offset is 30% of the estimated cost or foreign exchange component.
Five Sectoral Multi-Disciplinary Indigenisation Committees have been set up in the Department of Defence Production for the sectors Lands, Navy, Air, Missile and Electronics, to promote indigenisation in these fields.
This information was given by Minister of State for Defence Shri MM Pallam Raju in written reply to Dr. Janardhan Waghmare in Rajya Sabha today.
