A total 333 private companies have been issued 539 industrial licences for defence production in India and out of these, 110 companies have started production.
In a written reply to Vijay Pal Singh Tomar in the Rajya Sabha on Monday, Minister of State for Defence, Ajay Bhatt, said that the defence industry sector, which was hitherto reserved for the public sector, was opened up to 100 per cent for Indian private sector participation in May, 2001. Thereafter, many measures have been taken by the government to promote private sector participation.
Out of the total capital acquisition budget for the year 2021-22, 64.09 per cent has been earmarked for domestic capital procurement, while the defence capital outlay has been increased by 18.75 per cent in the Budget for FY 2021-22, the minister informed.
The Defence Procurement Procedure-2016 has been revised as Defence Acquisition Procedure (DAP)-2020, which is driven by the tenets of the defence reforms announced as part of the ‘Aatmanirbhar Bharat Abhiyan’ (self-reliant India campaign), Bhatt said.
In order to promote indigenous design and development of defence equipment, the ‘Buy’ (Indian-IDDM or Indigenously Designed, Developed and Manufactured) category has been accorded top most priority for procurement of capital equipment, he said.
The ministry has notified a ‘Positive indigenisation list’ of 209 items for which there would be an embargo on the import beyond the timeline indicated against them.
This would offer 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, Bhatt said.
The ‘Make’ procedure of capital procurement has been simplified. There is a provision for funding up to 70 per cent of development cost by the government to the Indian industry under Make-I category. In addition, there are specific reservations for MSMEs under the ‘Make’ procedure.
“The procedure for ‘Make-II’ category (industry funded), introduced in DPP 2016 to encourage indigenous development and manufacture of defence equipment, has a number of industry-friendly provisions such as relaxation of eligibility criterion, minimal documentation, provision for considering proposals suggested by industry/individual etc.,” the minister said.
So far, 58 projects relating to army, navy and air force have been accorded ‘approval in principle’, Bhatt informed tht House.
The government has enhanced FDI in defence sector to up to 74 per cent through the automatic route for companies seeking new defence industrial licence and up to 100 per cent by the government route wherever it is likely to result in access to modern technology or for other reasons to be recorded.
An innovation ecosystem for defence titled Innovations for Defence Excellence (iDEX) has been launched in April 2018. iDEX is aimed at creation of an ecosystem to foster innovation and technology development in defence and aerospace.
To give a major boost to development of innovative defence technology and support a growing startup base in the country, the Ministry of Defence has earmarked Rs 1,000 crore during 2021-22 for procurement from the iDEX startups, the minister said.
The Department of Defence Production under the Ministry of Defence has also approved a scheme for Innovation in Defence Excellence (iDEX) during the current year which is worth Rs 498 crore for five years. The scheme aims to benefit 300 new startups for innovative design and development in defence sector.