Government clears 33 defence manufacturing projects

[AVERAGE INDIAN]

New Delhi, Oct 8 (IANS) In a bid to boost domestic defence manufacturing, the commerce ministry Tuesday said it has cleared 33 proposals in the sector.

According to the Department of Industrial Policy and Promotion (DIPP), it has cleared all 33 proposals last week.

Of the 33 proposals, 19 are of Reliance Aerospace Technologies, Bharat Forge, Mahindra Telephonic Integrated Systems, Punj Lloyd Industries, Mahindra Aero Structure and Tata Advanced Materials and others.

DIPP said that 14 pending defence applicants do not require any further permission to commence operations as a vast number of defence items have been delicensed.

"It is expected that clearance of these 33 applications and the deregulation of defence product list, excluding a large number of components from purview of industrial licensing, will provide a major impetus to advanced manufacturing in defence sector," DIPP said in a statement.

In August, the central government through notification raised the foreign direct investment (FDI) limit in the defence sector to 49 percent.

A meeting of the cabinet, presided over by Prime Minister Narendra Modi, Aug 6 decided to hike the cap in the defence sector in a move that can help India curb its import bill on military hardware.

India sources 70-75 percent of such hardware from abroad and Finance Minister Arun Jaitley, in his budget speech, had said the government was committed to allowing higher foreign equity in the sector.

Government clears 33 long-pending defence projects - The Economic Times

 

[AVERAGE INDIAN]

Licences cleared for 19 high-tech defence JVs

In a significant push to the 'make in India' campaign launched by prime minister Narendra Modi and in an effort to secure India's defences in a troubled neighbourhood, the NDA government cleared industrial licences for 19 major joint ventures to manufacture high technology defence items in the country.

This is the first batch of proposals that have been given the green signal after the Modi government increased the foreign direct investment (FDI) cap to 49 per cent in defence manufacturing, first announced in the maiden budget of finance minister Arun Jaitley on July 10.

Some of these proposals have been pending for long, given that foreign companies were awaiting increase in FDI cap to 49 per cent after formation of new government at centre.

The commerce and industry ministry's clearance of industrial licences comes in the wake of the NDA government's launch of 'make in India' campaign in 25 industrial sectors to push up contribution of industry to 25 per cent from the prevailing 15 per cent in GDP.

The industrial licences panel headed by industry secretary Amitabh Kant cleared the licences for defence joint ventures that is expected to assist top industrial houses like Ambanis, Tatas, Birlas, Mahindras, Kalyanis and Punjs, that have joint ventures with global defence companies.

The government has asked 14 other defence joint venture companies with foreign partners to begin production as industrial licences are not required after several items were taken out of the licenced list.

As per norms, spare parts, components, castings, moulds and dual use items manufacture do not require industrial licenses. Manufacturers will have to file industrial entrepreneurship memorandums (IEMs) and commence production under the automatic route. This is also expected to encourage original equipment manufacturers to set up base in the country.

The government has also decided to do away with stipulation of annual production limits set under industrial licences. Defence companies have been allowed to sell licensed items to entities under control of the home ministry, state governments, state-run enterprises and other companies that hold such licences.

In effect, defence joint ventures will not be required to seek clearances from department of defence production to sell the licenced items. Instead, the companies will have to file bi-annual returns on the sale. The industries ministry will shortly notify the relaxed norms on production and sale.

Government sources said that the 19 defence joint ventures that got industrial licences in the last one week can commence production right away.

For instance, Tata Advanced Systems that has collaboration with US-based Lockheed Martin, will immediately begin assembly of aero-structures that include centre wing box and empennage for defence aircraft. The joint venture has a 100 per cent buyback arrangement with foreign partner, Lockheed Martin.

Prime minister Narendra Modi met Lockheed Martin chairperson Marillyn A Hewson in New York and impressed on her to set up base for production of its trademark helicopters, Hercules transport planes and fighter aircraft in India.

Reliance Aerospace Technologies that has a joint venture with French Aerospace giant, Dassault Aviation and another tie up with US-based Boeing, will be able to commence production facilities in Andhra Pradesh as the defence deals stipulate 30 per cent domestic sourcing of equipment, spares and indigenous material for the Rafale combat jets, Falcon jets and Boeing's P81 aircraft.

Bharat Forge, Mahindra Telephonic Integrated Systems, Punj Lloyd, Mahindra Aero Structure are other major Indian companies that will benefit from the industrial licences for defence joint ventures with foreign collaborators.

Through these joint ventures, foreign companies will be able to invest up to 49 per cent that includes 24 per cent FDI under the automatic route. Also, doing away with earlier norm of 51 per cent equity ownership by single Indian investor or domestic company will hasten the investment flows, said an official news release.

Major international defence companies that have been eyeing the Indian market include BAE System of UK, Pilatus (Switzerland), Raytheon (US), MBDA of France and IAI of Israel.

The latest industrial licences and easing of investment norms is also expected to propel larger manufacturing of defence products in India. The Indian defence market is expected to touch a whopping $ 250 billion by 2020. As per the offsets policy, 30 per cent of the equipment, hardware and software will have to be manufactured in India.

Licences cleared for 19 high-tech defence JVs | mydigitalfc.com

 

[sob]

This is very good news. Hope to see the production commencing soon from these projects.

 

[Zebra]

Indeed, very good news.

Ache din aane wale hain.

 

[sgarg]

More good news coming. This is just the start.