Department of Defence Production issues authorisation for export of Munitions List items covered in Category 6 of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET). At present, the exports are being made to more than 75 countries all over the world. Names of the countries cannot be divulged due to strategic reasons.
To foster defence manufacturing ecosystem in the country, the Government has taken several policy initiatives in the past few years and brought in reforms to encourage indigenous design, development and manufacture of defence equipment, thereby promoting self-reliance in defence manufacturing & technology in the country.
These initiatives, inter-alia, include according priority to procurement of capital items falling in Buy Indian (IDDM) Category from domestic sources under Defence Acquisition Procedure (DAP)-2020;
Notification of four ‘Positive Indigenization Lists’ of total 411 items of Services and three ‘Positive Indigenization Lists’ of total 3,738 items of Defence Public Sector Undertakings(DPSUs), for which there would be an embargo on the import beyond the timelines indicated against them;
Simplification of Industrial licensing process with longer validity period; Rationalised Defence Product List which required Industry License; Liberalization of Foreign Direct Investment(FDI) policy allowing 74% FDI under automatic route; Simplification of Make Procedure; Launch of Mission DefSpace;
Launch of Innovations for Defence Excellence (iDEX) scheme involving Start-ups & Micro, Small and Medium Enterprises (MSMEs); Implementation of Public Procurement (Preference to Make in India) Order 2017; Launch of an indigenization portal namely SRIJAN to facilitate indigenisation by Indian Industry including MSMEs;
Reforms in Offset policy with thrust on attracting investment and Transfer of Technology for Defence manufacturing by assigning higher multipliers; and Establishment of two Defence Industrial Corridors, one each in Uttar Pradesh and Tamil Nadu;
Earmarking of 25% defence R&D Budget for industry led R&D; and Progressive increase in allocation of Defence Budget of military modernization for procurement from domestic sources.
The Government has taken several policy initiatives in the past few years and brought in reforms to encourage indigenous design, development and manufacture of defence equipment, thereby promoting self-reliance in defence manufacturing & technology in the country.
Our defence industry is now capable of manufacturing wide variety of high-end requirements e.g. Tanks, Armoured vehicles, Fighter aircrafts, Helicopters, warships, Submarines, Missiles, Electronic equipment, Special alloys, special purpose steels, and variety of ammunition. Rapid progress has been made towards achieving complete Aatmanirbharta in the manufacturing of defence equipment required by our Armed Forces within the country.
As a result of these initiatives, many State-of-the-art products including 155 mm Artillery Gun system ‘Dhanush’, Light Combat Aircraft ‘Tejas’, Surface to Air Missile system ‘Akash’, Main Battle Tank ‘Arjun’, T-90 Tank, T-72 Tank, Armoured Personnel Carrier ‘BMP-II/IIK’, Su-30 MK1, Cheetah Helicopter, Advanced Light Helicopter, Dornier Do-228, High Mobility Trucks, INS Kalvari, INS Khanderi, INS Chennai, Anti-Submarine Warfare Corvette (ASWC), Arjun Armoured Repair and Recovery Vehicle, Bridge Laying Tank, Bi-Modular Charge System (BMCS) for 155 mm Ammunition, Medium Bullet Proof Vehicle (MBPV), Weapon Locating Radar (WLR), Integrated Air Command and Control System (IACCS), Software Defined Radios (SDR), Lakshya Parachute for Pilotless Target Aircraft, Opto Electronic Sights for Battle Tanks, Water Jet Fast Attack Craft, Inshore Patrol Vessel, Offshore Patrol Vessel, Fast Interceptor Boat, Landing Craft Utility, 25 T Tugs, etc. have been produced in the country during the last few years.
An innovation ecosystem for Defence titled Innovations for Defence Excellence (iDEX) was launched in April 2018 to foster innovation and technology development in Defence and Aerospace by engaging Industries including MSMEs, Start-ups, Individual Innovators, R&D institutes and Academia.
iDEX provides them grants/funding and other support to carry out innovations/R&D which has potential for future adoption for Indian defence and aerospace needs. Under iDEX, 233 problems have been opened, 310 Start-ups have been engaged, 140 contracts have been signed. ‘iDEX Prime’ framework under iDEX has been launched in 2022 to support Start-ups with Grant-in-Aid up to Rs 10 crore to enable the development of high-end solutions.
Government has also established two Defence Industrial Corridors, one each in Uttar Pradesh and Tamil Nadu to attract investments in Aerospace & Defence sector and established a comprehensive defence manufacturing ecosystem in the country. Moreover, the respective State Governments have also published their Aerospace & Defence Policies to attract private players as well as foreign companies including Original Equipment Manufacturers (OEMs) in these two corridors.
The two State Governments have already signed MoUs/Agreements with various industries for investment worth total value of about Rs 24,000 crore. Investments worth Rs 2,242 crore and Rs 3,847 crore have been made in Uttar Pradesh Defence Industrial Corridor (UPDIC) and Tamil Nadu Defence Industrial Corridor (TNDIC) respectively.
The share of domestic procurement in the total procurement has been on an uptrend. In 2018-19, the domestic procurement stood at 54% of the total procurement, this figure jumped to 59% in 2019-20 and to 64% in 2020-21. This year it has been increased to 68% for domestic procurement, of this 25% budget has been earmarked for procurement from private industry.
With focus of Government on indigenisation and procurement of defence products from the domestic resources, the expenditure on defence procurement from foreign sources has reduced from 46% to 36% in the last four years i.e. from 2018-19 to 2021-22.
All modernisation requirements of the three Services & Indian Coast Guard to be indigenously sourced irrespective of nature of procurement
Requirement of Integrity Pact Bank Guarantee dispensed with to reduce financial burden on domestic industry
To further promote ‘Make in India’ and ‘Aatmanirbharta’ in defence and enable Ease of Doing Business, Defence Acquisition Procedure (DAP) 2020 has been amended based on the approvals accorded by Defence Acquisition Council (DAC) in respect of the following:
Going forward all modernisation requirements of the Defence Services and Indian Coast Guard are to be indigenously sourced irrespective of the nature of procurement. Import of defence equipment/sourcing from Foreign Industry of capital acquisitions should only be an exception and undertaken with specific approval of DAC/Raksha Mantri.
As advised by Ministry of Finance and to reduce financial burden on the Indian Defence Industry whilst maintaining financial safeguards, requirement of Integrity Pact Bank Guarantee (IPBG) has been dispensed with. Instead, Earnest Money Deposit (EMD) will be taken as a bid security for all acquisition cases with Acceptance of Necessity (AoN) cost more than Rs 100 crore. EMD will be valid for the selected vendor up to signing of contracts and returned to remaining vendors post declaration of selection. Post contract, Integrity Pact will be covered through the Performance Cum Warranty Bank Guarantee (PWBG). Further, as per extant Government of India policy, EMD is not required from Micro and Small Enterprises (MSEs).
To encourage wider participation and broad base indigenous defence manufacturing sector in the country, the total order quantities in acquisition cases are to be split between shortlisted vendors, wherever viable. Further, the other technically qualified bidders who have not been awarded contract will be issued a certificate by the Services indicating that the product has been successfully trial evaluated, to facilitate vendors to explore other markets.
To create an ecosystem which fosters innovation and encourages technology development in Defence by engaging R&D institutes, academia, industries, startups and individual innovators, the iDEX framework was launched by Prime Minister Shri Narendra Modi in April 2018. Existing provisions of DAP 2020 links the procedures of Staff Evaluation, CNC and award of Contract for iDEX procurement, to the procedure in 'Buy (Indian- IDDM)', which entails a long period of approximately two years before placement of the order. To enable the budding startup talent pool of the country to contribute towards the twin mantras of self-sufficiency and indigenization, the procurement process under iDEX procedure of DAP 2020 has been simplified. With this simplification, time taken from grant of AoN to signing of contract will be reduced to 22 weeks.
Make-II procedure of DAP-2020, involving indigenisation of defence equipment through industry funded projects at prototype development stage, has been simplified by incorporating Single Stage Composite Trials of prototypes and dispensing off with quantity vetting and scaling for initial procurements in the delegated cases. Post simplification, the timelines in Make-II procedure will be reduced to 101-109 weeks from an existing total time-period of 122-180 weeks.
The Defence Acquisition Procedure (DAP) 2020 has been established in 2020 as a potential catalyst for the Atmanirbhar Bharat Abhiyaan, in the sector of defence manufacturing.
The DAP eases the procurement and acquisition of upgraded technology, products and services for the Tri-Services and other allied defence services. Through its many improved features, it hopes to provide a boost to the Make in India efforts in the field– especially to MSME’s.
It also establishes a greater degree of public accountability, transparency, fair competition and a level playing field in the sector.
The Defence Procurement Procedure (DPP) was first initiated in 2002 to streamline the procurement of military hardware for the Armed Forces in a systematic and time-bound manner.
It was reformed in 2016, putting an emphasis on indigenously designed, developed and manufactured weapon systems and eventually moved towards self-reliance in the field of defence manufacturing.
Reservation in Categories for Indian vendors: With FDI in defence manufacturing permitted up to 100% (up to 74% under Automatic route and beyond 74% under Government route), there is an opportunity for the domestic industry to increase production in the sector.
Enhancement of Indigenous Content: Each of the categories has seen an increase in the procurement and acquisition of indigenously manufactured products and technologies in the sector. This would also be facilitated by Inter-Governmental Agreements (IGAs) that would help enable Import Substitution of defence products, technologies and spare parts
Buy (India -IIDM)- Min 50%
Buy (India) - Indigenous design- Min 50% , Otherwise - Min 60%
Buy and Make (India) - Min 50% of Make
Buy ( Global - Manufacturer in India) Min 50% of Buy plus Make
Buy (Global)- Min 30% for Indian vendors
Rationalization of Trial and Testing Procedures - Make and Innovation: Besides Make I/II/III which are government and industry-funded efforts towards achieving greater indigenization of manufacturing, the Innovations for Defense Excellence (iDEX) was set up for incubation and infrastructure support to startup enterprises in the sector. Design and Development
Buy (Global – Manufacturing in India) – This new feature mandates that the entire or part of the manufacturing procedure for equipment / spare parts / Maintenance or Repair must be conducted by the Indian subsidiary of foreign investors.
Ease of Doing Business – Easier and faster facilitation of operations and decision making through the Project Management Unit; Preference is given to manufacturers producing complete defence products, rather than parts; Increase of multipliers in the offset policy with respect to direct purchase, TOTs and FDI to incentivise the discharge of offsets; Easing of trials and testing such as avoidance of duplicate trials, modification of the scope of trials, removing repeat inspections, etc.
India is sharing its space science with over 60 developing countries, says PM
The initiative is aimed at developing innovative solutions for the defence forces in the space sector.
Space technology is an example of what security will mean for any strong nation in the future. Various challenges in this area have been reviewed and identified by the three services. We have to work fast to solve them. Under Mission DefSpace, 75 challenges in the space sector have been identified for private firms to work on.
New Frontiers - As national defence has always been a top priority of the government, the Indian military is expanding beyond land, water and sky towards deep-sea and space programs .
Pointing to the increasing importance of space technology, PM Modi said it is shaping new definitions of India’s space diplomacy and that the country is currently sharing its space science with more than 60 developing nations.
The South Asia satellite is an effective example of this. By next year, ten ASEAN countries will also get real-time access to India's satellite data. Even developed countries like Europe and America are using our satellite data .
Innovations for Defence Excellence (iDEX) framework was launched by the Government with the aim to foster innovation and technology development in Defence and Aerospace Sector by engaging Industries including MSMEs, start-ups, individual innovators, R&D institutes and academia and promote self-reliance.
The Government has approved a central sector scheme for iDEX with budgetary support of Rs. 498.78 crore for the next 5 years from 2021-22 to 2025-26. The objective of the scheme is to provide financial support to nearly 300 Start-ups/MSMEs/individual innovators and about 20 Partner Incubators through Defence Innovation Organisation (DIO).
The Government encourages the start-ups to contribute to the defence sector and develop aerospace setup in the country by providing substantial grants, easier and faster access to test facilities/infrastructure available with various Government agencies, co-creation and co-innovation using smooth operating procedures and minimal documentation, and facilitating procurement, thus making the entire regime conducive for them.
The iDEX initiative was launched by the Hon’ble PM in April 2018. iDEX aims to achieve self - reliance and foster innovation and technology development in Defence and Aerospace by engaging Industries including MSMEs, start-ups, individual innovators, R&D institutes and academia. iDEX has partnered with leading incubators in the country to provide handholding, technical support and guidance to the winners of iDEX challenges.
Defence India Start-up Challenge (DISC) are launched with Problem Statements (PS) from Armed Forces and OFB/DPSUs for resolution by innovators.
iDEX will be funded and managed by a Defence Innovation Organisation (DIO) formed as a not for profit company as per Section 8 of the Companies Act 2013 for this purpose.
The modalities of implementation of DIF will be managed by a specialized team known as the Innovation for Defence Excellence (iDEX) within the DIO. DIO will provide high level policy guidance to iDEX. iDEX will have functional autonomy.
The CEO of iDEX will be selected and recruited by the DIO and will be a professional person of sound technical, scientific and engineering background with divergent knowledge and experience in innovation and research.CEO of iDEX would also be CEO of DIO thereby providing the linkage between the high level policy guidance given by DIO and its implementation in a professional manner through iDEX.
To execute the above functions, the iDEX team will need to undertake the following activities:
Setting up and managing of the iDEX network in form of Independent Defence Innovation Hubs.
Communicate with innovators/startups through the Defence Innovation Hubs regarding defence and aerospace needs.
Organizing various challenges/hackathons to shortlist potential technologies for defence and aerospace use.
Facilitate scale-up, indigenization and integration in manufacturing facilities for successfully piloted technologies.
Evaluate technologies and products coming from innovators/startups in terms of their utility and impact on the Indian defence and aerospace setup
Interface with the military (Army/Navy/Airforce) top brass about key innovative technologies and encourage their adoption into the defence establishment with suitable assistance (financial if required).
India is the world’s largest defence equipment importer and is expected to spend around USD 220 Billion in the coming decade to modernize its armed forces. In the recent years, the government of India has initiated various schemes like Make In India, Startup India, Atal Innovation Mission (AIM)4, etc. to encourage innovation and entrepreneurship in the Indian commercial ecosystem.
This has also made increasingly evident that achieving the goal of self - sufficiency for the Indian military will require a means to incorporate innovation rapidly in the weapons procurement process.
Ministry of Defence aims to create an ecosystem which fosters innovation and encourages technology development in Defence by engaging R&D institutes, academia, industries, start- ups and even individual innovators.
iDEX aims at creation of an ecosystem to foster innovation and technology development in Defence and Aerospace by engaging Industries including MSMEs, start-ups, individual innovators, R&D institutes & academia. And provide them grants/funding and other support to carry out R&D which has good potential for future adoption for Indian defence and aerospace needs.
iDEX will be funded and managed by a ‘Defence Innovation Organization (DIO)’ which has been formed as a ‘not for profit’ company as per Section 8 of the Companies Act 2013 for this purpose, by the two founder members i.e. Defence Public Sector Undertakings (DPSUs) - HAL & BEL. iDEX will function as the executive arm of DIO, carrying out all the required activities while DIO will provide high level policy guidance to iDEX.
Facilitate rapid development of new, indigenized, and innovative technologies for the Indian defence and aerospace sector, to meet needs for these sectors in shorter timelines
Create a culture of engagement with innovative startups, to encourage co-creation for defence and aerospace sectors
Empower a culture of technology co-creation and co-innovation within the defence and aerospace sectors.
SPARK or Support for Prototype & Research Kickstart (in Defence) is the scheme for funding startups selected through the DISC challenges. Applicants showing capability, intent, and promise to be able to produce functional prototypes or to productize existing technologies will be awarded up to Rs. 1.5 crores, strictly on a milestone basis in the form of grant/equity/debt/other relevant structures. The exact amount and mode of each grant is decided by a High-Powered Selection Committee (HPSC) based on the application.