Manufacturing Defence Equipment
(Source: Indian Ministry of Defence; issued June 26, 2019)
Capital procurement of defence equipment is undertaken from various domestic as well as foreign vendors, based on operational requirements of the Armed Forces, the availability or capacity to produce the equipment in India and abroad, to keep the Armed Forces in a state of readiness to meet the entire spectrum of security challenges.

During the last four financial years (2015-16 to 2018-19), 135 contracts have been signed with Indian vendors and 75 contracts have been signed with foreign vendors for capital procurement of defence equipment for Armed Forces. The defence equipment contracted with foreign vendors during this period include aircrafts, helicopters, missiles, rockets, artillery guns, assault rifles, navy vessels, simulators and ammunitions.

Government is pursuing initiatives to achieve higher levels of indigenisation and self-reliance in the defence sector by harnessing the capabilities of the public and private sector industries in the country. These measures include according priority and preference to procurement from Indian vendors and liberalization of the licensing regime.

Defence Procurement Procedure (DPP) accords the highest priority to Buy Indian (Indigenously) Designed Developed and Manufactured (IDDM).

The ‘Make’ procedure has been simplified with provisions for earmarking projects not exceeding development cost of Rs.10 crores (government funded) and Rs.3 crores (Industry funded) for Micro, Small and Medium Enterprises (MSMEs); and with provisions for involving private industry as production agencies and technology transfer partners.

Government has also promulgated the policy on Strategic Partnership in the Defence Sector to encourage broader participation of the private sector in manufacture of major defence platforms and equipment.

This information was given by Raksha Rajya Mantri Shri Shripad Naik in a written reply to Shri Mohammed Faizal P.P in Lok Sabha today.

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Defence Production
(Source: Indian Ministry of Defence; issued June 26, 2019)
Ordnance Factories and Defence Public Sector Undertakings have played a huge role in making our country a defence production hub. There are 41 Ordnance Factories and 9 DPSUs in our country contributing to more than Rs.58,000 crores approx. in defence production every year.

Government provides support to Defence Public Sector Undertakings and Ordnance Factories to expand their activities. As a result of these efforts, the Defence Public Sector Undertakings have achieved the turnover of Rs.45,776 crores in 2018-19 which is the highest ever by the Defence PSUs.

Four Defence PSUs, viz. Hindustan Aeronautical Ltd. (HAL), Bharat Electronics Ltd. (BEL), Mazagon Dock Shipbuilders Ltd. (MDL) and Bharat Earth Movers Ltd. (BEML) have recorded their highest turnover during the year 2018-19.

As a part of Prime Minister’s Agenda for public sector enterprises, the Defence PSUs have been given a target to achieve 25% of their turnover through exports by 2022-23. Further, they have also been targeted to indigenize Rs.15,000 crores worth goods by 2022-23. Each defence PSU is in the process of developing to projects relating to Artificial Intelligence.

Several steps have also been taken to strengthen Ordnance Factory Board. These include:

-- Approval, in principle, has been granted for 15 proposals of Rs.861 crores for capital upgradation and modernization of Ordnance Factories during 2018-19.

-- OFB Procurement Manual has been revised during 2018-19 to streamline the procurement of store items in OFB. Export division under Member, OFB has been started to promote greater exports from OFB and enhanced delegation of powers given to Member (Exports) of OFB.

-- 494 workers of Ordnance Factory, Avadi are being re-skilled for employment in new trades.

In pursuance of ‘Make in India’ initiative of the Government, following measures have been taken to achieve substantive self-reliance in defence production: -
-- Defence Procurement Procedure (DPP) has been revised in 2016 wherein specific provisions have been introduced for stimulating growth of the domestic defence industry.

-- A new category of procurement ‘Buy {Indian-IDDM (Indigenously Designed, Developed and Manufactured)}’ has been introduced in DPP-2016 to promote indigenous design and development of defence equipment. It has been accorded top most priority for procurement of capital equipment.

Besides this, preference has been accorded to ‘Buy (Indian)’, ‘Buy and Make (Indian)’ & ‘Make’ categories of capital acquisition over ‘Buy (Global)’ & ‘Buy & Make (Global)’ categories.

-- Government has notified the ‘Strategic Partnership (SP)’ Model which envisages establishment of long-term strategic partnerships with Indian entities through a transparent and competitive process, wherein they would tie up with global Original Equipment Manufacturers (OEMs) to seek technology transfers to set up domestic manufacturing infrastructure and supply chains.

-- The ‘Make’ Procedure has been simplified with provisions for funding of 90% of development cost by the Government to Indian industry and reserving projects not exceeding development cost of Rs.10 crore (Government funded) and Rs.3 crore (Industry funded) for MSMEs.

-- Separate procedure for ‘Make-II’ sub-category has been notified wherein a number of industry friendly provisions such as relaxation of eligibility criterion, minimal documentation, provision for considering proposals suggested by industry/individual etc., have been introduced. Till date, 36 proposals for development by industry have been given ‘in-principle’ approval under Make-II. List of Proposals are as given below.


Click here for the full statement, with graphics, on the PIB website.

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