Pro Industry initiatives taken by Department of Defence Production to facilitate investment in Defence Sector

To promote Defence Sector manufacturing in India, in line with the “ Make in India ” initiative of the Government, there is a need to educate the investors about the opportunities available in Defence manufacturing Sector . To act as a single point of contact, a Defence Investor Cell is created under Department of Defence Production, Ministry of Defence, which will provide all necessary information including addressing queries related to investment opportunities, procedures and regulatory requirements for investment in the sector

Following pro Industry initiatives have been taken, by Department of Defence Production to facilitate investment

1. Level Playing Field –
   • Exchange Rate Variation (ERV) protection made applicable for Indian private sector at par with Defence Public Sector Undertakings.
   • The Excise Duty/Custom Duty regime made uniform for all segments of industry, viz., private sector as well as public sector.
2. Defence Offsets –
   • Provision of multiplier of 1.5 for MSMEs engaged as Indian offset Partner (IOP).
   • Provision of multiplier upto 3, for critical technology transfer to DRDO.
   • Foreign companies may indicate their IOPs and components for discharge of offsets even after signing of the contract.
   • https://makeinindiadefence.gov.in/admin/writereaddata/upload/2018-09-11-185655DefenceOffsetGuidelines.pdf
3. Non core Items-
   • 275 items of Ordnance Factory Board categorized as Non Core to be sourced from vendors.
   • https://makeinindiadefence.gov.in/pages/ofb-related-policies-> List of 275 Non Core Items
4. ‘Make ‘ Procedure –
   • To promote Design and Development by the vendors, revised and simplified Make-II procedure issued, with preferential treatment to MSMEs for prototype development costing Rs 3 Crs.
   • https://makeinindiadefence.gov.in -> Make Projects
5. FDI Policy –
   • FDI upto 49% allowed under automatic route and above 49% with Government approval.
   • https://makeinindiadefence.gov.in/pages/fdi-policy-in-defence-sector
6. Industrial Licensing Policy –
   • Upto 70% of the items i.e. parts, components, subsystems, raw materials etc. removed from purview of industrial licensing.
   • Initial validity of industrial license increased from 3 years to 15 Yr, further extendable upto 3 Yrs under IDR Act and lifetime validity under Arm’s Act.
   • https://makeinindiadefence.gov.in/pages/industrial-licensing-policy-in-defence-sector
7. Outsourcing and Vendor Development of Defence Public Sector Undertaking’s/Ordnance Factory Board –
   • Comprehensive guidelines issued by Defence Public Sector Undertaking’s/Ordnance Factory Board, which include vendor development for Indigenisation and import substitution.
   • https://makeinindiadefence.gov.in ->Policies Tab
8. Defence Export –
   • List of Munition items requiring authorization put in public domain to remove ambiguities.
   • Requirement of End user Certificate to be countersigned/stamped by Government authorities dispensed with for exports of parts, components and sub-systems, etc.
   • Applications are being received on-line.
   • Standard Operating Procedure(SOP) for issue of authorization for export put in public domain. Specific time limit introduced for issue of authorization.
   • https://makeinindiadefence.gov.in/pages/strategy-for-defence-exports
9. Green Channel
   • Green channel policy promulgated dispensing with the requirement of pre-dispatch inspection and acceptance of stores under supplier ”warranty/guarantee to the vendor”.
   • https://makeinindiadefence.gov.in/admin/writereaddata/upload/2018-07-16-191459Green_Channel_Policy.pdf
10. Timely Payments –
    • Defence Public Sector Undertaking’s mandated to pay upto 90% of the amount due on purchase of raw material and stores to vendors, specifically MSME within 30 days. Defence Public Sector Undertaking & Ordnance Factory Board making provisions for advance of 15% to MSME vendors.
11. Import embargo on items beyond given time lines to boost indigenisation & provide impetus to self reliance of Defence production.–
    1. 101 items list: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1644570
    2. 108 items list: https://pib.gov.in/PressReleasePage.aspx?PRID=1723148
    3. 2500 items list: https://srijandefence.gov.in/