The Ministry has fully utilized the allocated budget and there has been no underutilization in the last three years.During the last three financial years (2016-17 to 2018-19), contracts worth about Rs. 1,38,727.16 crore have been signed with foreign vendors for capital procurements of defence equipment for Armed Forces.
RakshaMantri Shri Rajnath Singh has informed that the details of Budget Estimates (BE), Revised Estimates (RE) and Actual Expenditure (Actuals) on the modernisation of Armed Forces under Defence Services Estimates (DSE) for the last three years are as under:-
(Rs. in crore)
| Year | Budget Estimates (BE) | Revised Estimates (RE) | Expenditure (Actuals) |
| 2016-17 | 69,898.51 | 62,619.36 | 69,280.16 |
| 2017-18 | 69,473.41 | 68,965.24 | 72,732.28 |
| 2018-19 | 74,115.99 | 73,882.95 | 75,900.54 |
Government is taking measures for modernization of the Armed Forces, through procurement of new equipment and upgrading of existing equipment and systems. The modernization projects are being progressed as per the approved Capital Acquisition Plans and in terms of the extant Defence Procurement Procedure.
Since the launch of ‘Make in India’ in September 2014, several measures have been taken by the Government to promote indigenous design, development and manufacture of defence & aerospace equipment in the country under ‘Make in India’ by harnessing the capabilities of the public and private sector.
Defence Procurement Procedure (DPP) has been revised in 2016 wherein specific provisions have been introduced for stimulating growth of the domestic defence industry.
Government has decided to establish two defence industrial corridors to serve as an engine of economic development and growth of defence industrial base in the country. These are spanning across Chennai, Hosur, Coimbatore, Salem and Tiruchirappalli in Tamil Nadu and spanning across Aligarh, Agra, Jhansi, Kanpur and Lucknow in Uttar Pradesh (UP).
An innovation ecosystem for Defence titled Innovations for Defence Excellence (iDEX) has been launched in April 2018 by the Hon’ble PM during Defexpo India 2018. iDEX is aimed 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 and Academia and provide them grants/funding and other support to carry out R&D which has potential for future adoption for Indian defence and aerospace needs.
The Ministry has instituted a new framework titled ‘Mission RakshaGyan Shakti’ which aims to provide boost to the IPR culture in indigenous defence industry.
Government has notified a Policy for indigenisation of components and spares used in Defence Platforms. The objective of the policy is to create an industry ecosystem which is able to indigenize the imported components (including alloys & special materials) and sub-assemblies for defence equipment and platform manufactured in India.
Defence Investor Cell has been created in the Ministry to provide all necessary information including addressing queries related to investment opportunities, procedures and regulatory requirements for investment in the sector.
FDI Policy has been revised and under the revised policy, FDI is allowed under automatic route upto49% and beyond 49% through Government route wherever it is likely to result in access to modern technology or for other reasons to be recorded.
The Defence Products List for the purpose of issuing Industrial Licenses (ILs) under IDR Act has been revised and most of the components, parts, sub-systems, testing equipment and production equipment have been removed from the list, so as to reduce the entry barriers for the industry, particularly small & medium segment. The initial validity of the Industrial Licence granted under the IDR Act has been increased from 03 years to 15 years with a provision to further extend it by 03 years on the case-to-case basis.
The process for export clearance has been streamlined and made transparent & online.
Offset guidelines have been made flexible by allowing change of Indian Offset Partners (IOPs) and offset components, even in signed contracts. Foreign Original Equipment Manufacturers (OEMs) are now not required to indicate the details of IOPs and products at the time of signing of contracts. ‘Services’ as an avenue of offset have been re-instated.
Government has set up the Technology Development Fund (TDF) to encourage participation of public/private industries especially MSMEs, through provision of grants, so as to create an eco-system for enhancing cutting edge technology capability for defence application.
Government has also promulgated the policy of Strategic Partnership in the Defence Sector which encourages participation of the private sector in manufacture of major Defence platforms and equipment in four selected segments viz. Submarines, Fighter Aircraft, helicopters and Armoured Fighting vehicles/Tanks.
