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MoU UNDER MAKE IN INDIA PROGRAMME & FDI IN DEFENCE SECTOR

National Defence Bureau,
New Delhi, 20 December 2017

The following agreements have been signed by Government of India under ‘Make in India’ initiative:

Government of Republic of India has signed agreement with Government of Russian Federation for construction of follow-on-ships of Project 1135.6 in Russia and in India on 15 October 2016

Another agreement was signed on 25 December 2015 on cooperation in the field of Helicopter Engineering.

In the last three financial years i.e. 2014-15 to 2016-17, the Government has accorded Acceptance of Necessity (AoN) for total 148 capital acquisition proposals, out of which 105 proposals worth Rs. 2,33,000/- Crore approximately have been categorised as ‘Buy (Indian-IDDM)’, ‘Buy (Indian)’, ‘Buy and Make (Indian)’ or ‘Make’ categories, which means Request for Proposal (RFP) shall be issued only to Indian Vendors.  Defence Procurement Procedure (DPP) stipulates a broad time frame of about 86-126 weeks to complete various stages of procurement cycle.

Raksha Rajya Mantri Dr. Subhash Bhamre informed Lok Sabha in reply to a question by Meenakashi Lekhi.

Government Clarifies On FDI In Defence

As per current Foreign Direct Investment (FDI) policy in defence sector notified by Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry vide Press Note No.5 (2016 Series), FDI upto 49% is allowed under automatic route and beyond 49% through Government route wherever it is likely to result in access to modern technology or for other reasons to be recorded.  Further, FDI in defence is subject to industrial licence under Industries (Development & Regulation) Act, 1951 and manufacturing of Small Arms and Ammunition under the Arms Act, 1959.

In so far as joint venture in the defence sector with more than 74 per cent FDI is concerned, no such proposal has been approved by the Government. The information was given by Raksha Rajya Mantri Dr. Subhash Bhamre in a written reply to AP Jithender Reddy in Lok Sabha today.

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