16-Dec-2022: Value of indigenous Defence production

The value of indigenous defence production for Financial Years 2020-2021 and 2021-2022 are Rs 84,643 crore and Rs 94,846 crore respectively. To achieve ‘Aatmanirbharta’ and realise the goal of ‘Make in India’, Government of India has established two Defence Industrial Corridors (DICs) in the country, one in Uttar Pradesh and other in Tamil Nadu. Six nodes viz. Agra, Aligarh, Chitrakoot, Jhansi, Kanpur and Lucknow have been identified for developing Uttar Pradesh Defence Industrial Corridor (UPDIC). Similarly, five nodes viz. Chennai, Coimbatore, Hosur, Salem and Tiruchirappalli have been identified for developing Tamil Nadu Defence Industrial Corridor (TNDIC). Government intends to develop defence manufacturing ecosystem having conducive conditions including supply chain for giving push to production and testing & certification to create economies of scale and facilitate development of internationally competitive enterprises in the country.

As per the information received from Government of Uttar Pradesh for UPDIC, 105 Memoranda of Understanding (MoUs) have been signed with industries/organisations worth potential investments of Rs 12,139 crore. Already, Rs 2,422 crore have been invested in UPDIC. Total 1,608 hectare of land has been acquired for development of UPDIC. Further, as per the information received from Government of Tamil Nadu for TNDIC, arrangements have been made through MoUs etc. for potential investment of Rs 11,794 crore by 53 industries. Already, Rs 3,847 crore have been invested in TNDIC. Total 910 hectare of land has been acquired for development of TNDIC.

The seven new DPSUs carved out of erstwhile Ordnance Factory Board have been incorporated as Government companies (wholly owned by the Government of India) under the Companies Act 2013 in October 2021. Government has taken steps to initially handhold and support these new defence companies in starting their business as corporate entities. In this regard, outstanding indents with erstwhile OFB were grandfathered and converted into deemed contracts valuing about Rs 70,776 crore for the next five years. These deemed contracts provide annual targets for delivery of products. Every year, 60% of amount pertaining to that year’s target would be paid by the Services to the new DPSUs as advance as per the terms and conditions stipulated in the deemed contract. The advances provide the working capital to the newly constituted DPSUs. With more functional and financial autonomy, these new DPSUs are focusing on widening their customer base, including exports to augment the volume of defence production. The DPSUs are pursuing export opportunity through interaction with Defence Attaches at various Indian Embassies and Missions abroad.

12-Dec-2022: Defence Industrial Corridors in the country

To achieve Aatmanirbharta and realise the goal of ‘Make in India’, Government of India has established two Defence Industrial Corridors (DICs) in the country, one in Uttar Pradesh and other in Tamil Nadu. 06 (six) nodes viz. Agra, Aligarh, Chitrakoot, Jhansi, Kanpur and Lucknow have been identified for developing Uttar Pradesh Defence Industrial Corridor (UPDIC). Similarly, 05 (five) nodes viz. Chennai, Coimbatore, Hosur, Salem, and Tiruchirappalli identified for developing Tamil Nadu Defence Industrial Corridor (TNDIC). Government intends to develop defence manufacturing ecosystem having conducive conditions including supply chain for giving push to production and testing & certification to create economies of scale and facilitate development of internationally competitive enterprises in the country.

As per the information received from Government of Uttar Pradesh for UPDIC, 105 Memorandum of Understandings (MoUs) have been signed with industries etc. worth potential investments of Rs 12,139 crore. Already, Rs 2,422 crore have been invested in UPDIC. Total 1,608 Hectare of land has been acquired for development of UPDIC. Further, as per the information received from Government of Tamil Nadu for TNDIC, arrangements have been made through Memorandum of Understandings (MoUs) etc. for potential investment of Rs 11,794 crore by 53 industries. Rs 3,847 crore have already been invested in TNDIC. Total 910 Hectare of lands has been acquired for development of TNDIC.

4-Feb-2022: Defence Industrial Corridors

The Government has established two Defence Industrial Corridors (DICs) in the country, one in Uttar Pradesh namely Uttar Pradesh Defence Industrial Corridor (UPDIC) and other in Tamil Nadu namely Tamil Nadu Defence Industrial Corridor (TNDIC) with an aim to attract investment of about Rs 10,000 crore in each corridor. Six nodes, namely Aligarh, Agra, Chitrakoot, Jhansi, Kanpur and Lucknow have been identified for UP Defence Industrial Corridor. Five nodes, namely Chennai, Coimbatore, Hosur, Salem and Tiruchirappalli have been identified for TN Defence Industrial Corridor. The nodes have been selected based on high potential for creation of end-to-end ecosystem for Aerospace and Defence sector development covering design, engineering and manufacturing.

As per information received from State Governments, in UP Defence Industrial Corridor, Uttar Pradesh Expressways Industrial Development Authority (UPEIDA), the nodal agency, has signed 62 (sixty-two) Memorandum of Understandings (MoUs) with private / public industries, worth potential investments of approx. Rs 8,638 crore. Out of 62 MoUs, 25 (twenty-five) proposals with potential investments of approx. Rs 2,527 crore have been finalized and land has been allotted to the industries. In TN Defence Industrial Corridors, Tamil Nadu Industrial Development Corporation (TIDCO), the nodal agency, has made arrangements through MoUs etc. for potential investment of Rs 11,153 crore by 40 Industries.  Setting up of Defence Industrial Corridors aim to catalyse indigenous production of defence and aerospace related items, thereby reducing our reliance on imports and promoting export of these items to other countries which may create ample employment opportunities and growth of private domestic manufacturers; Micro, Small and Medium Enterprises (MSMEs); and start-ups. UP Government promulgated ‘Uttar Pradesh Defence & Aerospace Unit and Employment Promotion Policy’ in 2018 and TN Government promulgated ‘Tamil Nadu Aerospace and Defence Industrial Policy’ in the year 2019, offering incentives to the companies in form of Stamp duty incentives, Land cost incentives, Electricity tax exemption etc. Further, basic infrastructure support such as internal roads, drainage system, water and electricity supply etc. are also provided by the State Governments.

Micro, Small & Medium Enterprises are the integral part for the successful implementation of both the corridors attracting investments in Aerospace and Defence sector. Presently out of total 81 MOUs signed by both the State Governments in two Defence Industrial Corridors, 30 are with MSMEs. In both the corridors, investments have been attracted from Anchor industries, MSMEs, including Foreign Original Equipment Manufacturers (FOEMs) and Start-ups.  Even under Offset policy, higher multiplier of 2.0x level has been assigned for investment in Defence Corridors. As per the provisions of FDI policy in Defence sector, foreign investments in the sector is subject to security clearance by Ministry of Home Affairs. Further foreign investments in the defence sector are also subject to scrutiny on grounds of National Security and Government reserves the right to review any foreign investment in the Defence sector that affects or may affect National Security.

At present, there is no proposal for setting up of Defence Industrial Corridors in Bihar.

3-Dec-2021: Defence Industrial Corridors

In the General Budget 2018-19, Central Government announced setting up of 02(two) Defence Industrial Corridors (DICs) in the country. In pursuance of the said announcement, it was further decided to set up one of these Corridors in Uttar Pradesh (UP) and another in Tamil Nādu (TN). Subsequently, six nodes, namely Aligarh, Agra, Chitrakoot, Jhansi, Kanpur and Lucknow were identified for Uttar Pradesh Defence Industrial Corridor (UPDIC) and five nodes, namely Chennai, Coimbatore, Hosur, Salem and Tiruchirappalli for Tamil Nadu Defence Industrial Corridor (TNDIC).Defence Industrial Corridors (DICs) are aimed at providing fillip to the defence manufacturing ecosystem in both States and attract investment worth Rs. 10,000 Crore in each of the DICs by the year 2024-25. The respective State Governments provide necessary lands, connectivity and basic infrastructure for the DIC.

Subsequently, Government of India has received proposals from 08(eight) State Governments, including Telangana for setting up of Defence Industrial Corridors (DICs) in their States.  No proposal has been received from the State of Andhra Pradesh.  The two defence corridors are intended to provide a fillip to strengthening the defence manufacturing ecosystem in India including all States.

The Government has taken following steps to promote ‘Atmanirbhar Bharat’ in the defence sector:

1. Defence Procurement Procedure (DPP)-2016 was revised as Defence Acquisition Procedure (DAP) - 2020, which is driven by the tenets of Defence Reforms announced as part of ‘Aatmanirbhar Bharat Abhiyan’. In order to promote indigenous design and development of defence equipment ‘Buy {Indian-IDDM (Indigenously Designed, Developed and Manufactured)}’ category has been accorded top most priority for procurement of capital equipment. The ‘Make’ Procedure of capital procurement has been simplified. There is a provision for funding up to 70% of development cost by the Government to Indian industry under Make-I category, whereas Make-II procedure provides assurance to the industry for procurement. In addition, there are specific preferences for MSMEs under the ‘Make’ procedure.
2. Ministry of Defence has notified two ‘Positive Indigenisation Lists (PILs)’ with total 209 items for which there would be an embargo on the import beyond the timeline indicated against each of them, offering a great opportunity to the Indian defence industry to manufacture these items using their own design and development capabilities to meet the requirements of the Armed Forces in the coming years.
3. Ministry of Defence has earmarked about 64 per cent of its modernisation funds amounting to almost Rs 71,000 crore under the capital acquisition budget for 2021-22 for procurement from the domestic industries.
4. The Government of India has enhanced FDI limit in Defence Sector up to 74% through the Automatic Route for companies seeking new defence industrial license and up to 100% by Government Route wherever it is likely to result in access to modern technology. 
5. An innovation ecosystem for Defence, namely “Innovations for Defence Excellence (iDEX)”was launched in April, 2018. 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 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.
6. An indigenization portal, namely SRIJAN, has been launched in August 2020 for DPSUs/Services with an industry interface to provide development support to MSMEs/Start-ups/Industry for import substitution. As of today, 16583 items have been uploaded for indigenisation. Out of them, 2709 items have been indigenised.
7. Defence products list requiring Industrial Licences has been rationalised and manufacture of several parts or components are delicensed. 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 a case-to-case basis. A new online portal has been developed for facilitating filing of online applications for Industrial License under Industries (Development & Regulation) Act - IDR Act 1951/Arms Act 1959.
8. Government has established two Defence Industrial Corridors, one each in Uttar Pradesh and Tamil Nadu. It has been envisaged to attract total investments of Rs 20,000 Crore in the two Defence Industrial Corridors of Uttar Pradesh and Tamil Nadu by the year   2024-25. The respective State Governments have also published their Aerospace & Defence Policies to attract and facilitate private players as well as foreign companies including Original Equipment Manufacturers (OEMs) for investments in these two corridors.
9. “Offset portal” has been launched in May, 2019 to ensure greater transparency, efficiency and accountability in the process. Reforms in Offset policy have been included in DAP -2020, with thrust on attracting investment and Transfer of Technology for Defence manufacturing, by assigning higher multipliers to them.
10. Defence Investor Cell (DIC) has been created in February, 2018 in Ministry of Defence to provide all necessary information including addressing queries related to investment opportunities, procedures and regulatory requirements for investment in the sector.
11. Government has notified the ‘Strategic Partnership (SP)’ Model in May, 2017, which envisages establishment of long-term strategic partnerships with Indian entities through a transparent and competitive process, wherein they would tie up with global Original Equipment Manufacturers (OEMs) to seek technology transfers to set up domestic manufacturing infrastructure and supply chains.
12. Inter-Governmental Agreement (IGA) on “Mutual Cooperation in Joint Manufacturing of Spares, Components, Aggregates and other material related to Russian/Soviet Origin Arms and Defence Equipment” was signed in September, 2019. The objective of the IGA is to enhance the After Sales Support and operational availability of Russian origin equipment currently in service in Indian Armed Forces by organizing production of spares and components in the territory of India by Indian Industry by way of creation of Joint Ventures/Partnership with Russian Original Equipment Manufacturers (OEMs) under the framework of the “Make in India” initiative.

12-Nov-2021: Raksha Mantri Shri Rajnath Singh & UP Chief Minister hold consultations in Lucknow to enhance investment in UP Defence Industrial Corridor

Raksha Mantri Shri Rajnath Singh and Chief Minister of Uttar Pradesh Shri Yogi Adityanath held consultations to enhance investment in the UP Defence Industrial Corridor (UPDIC) at the Chief Minister’s residence in Lucknow on November 12, 2021. The Raksha Mantri listened to the views of representatives of private defence industries present at the meeting and was briefed on the progress of investments in UPDIC.

Appreciating the presence of large number of Industry representatives, Shri Rajnath Singh expressed confidence that a strong defence manufacturing ecosystem will soon be created in Uttar Pradesh helping to achieve ‘Aatmanirbhar Bharat’ envisioned by Prime Minister Shri Narendra Modi. “We understand the needs, risks and strengths of our Industries. If anyone has the capacity to make our country self-reliant at the earliest, it is our industries, and I have been emphasising this on various platforms”, the Raksha Mantri said. He described the setting up of Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu as one of the many steps that reflects the Government’s unwavering commitment to cater to needs of defence industries.

The Raksha Mantri also announced that the Government is considering centrally sponsored scheme to incentivise investments in Defence Industrial Corridors and develop the defence manufacturing ecosystem. He said that for the first-time private industries have been given a share in domestic manufacturing. The Raksha Mantri added that from 2014 till date over 350 licences were issued to private industries compared to 200 licences issued between 2000 and 2014. He further informed that Policy provisions are being considered to encourage the private sector in Design and Development Projects. Shri Rajnath Singh responded to specific proposals from industry representatives and said that the Ministry of Defence will consider and act on all suggestions to bring in reforms to boost the defence industry.

Listing out some of the initiatives of the Government, the Raksha Mantri said, UPDIC will provide connectivity, resources & environment to defence companies and open up new opportunities. “Free Transfer of Technology by DRDO and increase in FDI limit up for access to cutting edge technologies of the world are some of the steps taken by us to promote use of indigenous technology in the private sector,” he said. Raksha Mantri said that the Government has concluded contracts with global giants, which will enhance operational capabilities and capacity and most of the defence platforms will be manufactured in India through ties ups with Indian companies. Shedding light on the importance of domestic procurement, the Raksha Mantri said, the government has earmarked around 64 per cent of its modernisation funds under capital acquisition budget for 2021-22 for procurement from domestic companies. He added that the 'MAKE' category has been reformed and Innovation for Defense Excellence (iDEX) launched to encourage MSMEs and startups. He mentioned that, Rs 1,000 crore have been allocated for iDEX related purchases, which will be increased further in the future. Rs 500 crore have also been allocated separately to support our startups for the next five years, he said. Raksha Mantri credited defence industries with laying the foundation of India’s progress from an importer to an exporter. Shri Rajnath Singh said, our defence exports have grown by 334 per cent in the last five years and today we are exporting to 75 countries. He urged the anchor defence industries to identify more areas of research & development and manufacturing, adding that big domestic business houses and foreign Original Equipment Manufacturer (OEM) subsidiaries have not only been invited to tap into the potential of UPDIC but also to listen to their views.

Shri Rajnath Singh applauded the UP Chief Minister for acting with urgency to create a conducive business environment in the state in the last four years. Speaking on the reforms initiated by the state government he said, “the new policy reforms, coupled with the ever-increasing ranking in 'ease of doing business', have paved the way of industrial development in the state and taken 'Uttar Pradesh' on the path of 'Uttam Pradesh'”. Raksha Mantri said that he was informed that the state government has worked on land acquisition on all nodes of UPDIC and this will continue at a fast pace. He underlined the importance of law and order for investment and said that the state government has done commendable work in this regard. Saying that the Union Government is working hand-in-hand with the state government to promote R&D and growth of MSMEs, Shri Rajnath Singh expressed confidence that the UP Defence Industrial Corridor will become the vehicle of Industrial Revolution in Uttar Pradesh in the times to come.

The presence of industry representatives and other stakeholders in large numbers is an indication of a constructive dialogue between the government and other stakeholders in defence industry, he said. Raksha Mantri concluded his address by saying that the UP Defence Industrial Corridor will play a crucial role in creating a strong defence & aerospace sector in Uttar Pradesh and realise the Government’s dream of ‘Aatmanirbhar Bharat’.

Addressing the gathering, UP Chief Minister Yogi Adityanath said that from amongst investment proposals received in the UP Investors’ Summit, proposals worth more than Rs three lakh crore have been operationalised and production has started in most of them. He said that the participation of representatives of over 1000 companies from more than 70 countries in the Defence Expo 2020 in Uttar Pradesh was significant for UPDIC. He added that Uttar Pradesh has educational institutes like IIT BHU and IIT Kanpur and technical industries to promote R&D in defence. Chief Minister thanked Raksha Mantri for approving two major projects of Brahmos, DRDO and Bharat Dynamics Limited in the UPDIC, informing that land has been made available for both projects.

The Chief Minister expressed hope that investments in Uttar Pradesh would enable the state to contribute to the Prime Minister’s goal of 'Aatmanirbhar Bharat' and help India become an export hub in the defence sector.

Uttar Pradesh Minister of Industries, Shri Satish Mahana, Minister of State, Shri Dharamdev Prajapati, Defence Secretary Dr Ajay Kumar, Secretary of Defence Production Shri Raj Kumar, Chief Secretary of Uttar Pradesh Rajendra Kumar Tiwari, Additional Chief Secretary and UPEIDA CEO Shri Awanish Awasthi, officials of Ministry of Defence and State government and representatives from private industry attended the consultations.

26-Jul-2021: Land Acquired for Defence Corridor

Central Government has established two Defence Industrial Corridors (DICs), one each in the States of Uttar Pradesh and Tamil Nadu respectively.  Uttar Pradesh Defence Industrial Corridor (UPDIC) has 06(six) identified nodes viz. Agra, Aligarh, Chitrakoot, Jhansi, Kanpur and Lucknow.  Similarly, Tamil Nadu Defence Industrial Corridor (TNDIC) has 05(five) identified nodes viz. Chennai, Coimbatore, Hosur, Salem and Tiruchirappalli. To facilitate public/private sector for the investment in the two DICs, both State Governments have acquired lands at the identified nodes.  The State-wise details of the land acquired by both the State Governments in the year 2020-21 are as follows:

Name of State	Land Acquired in the year 2020-21 (in Hectare)
Uttar Pradesh	196.7853
Tamil Nadu	283.28

The establishment of the DICs aims at providing fillip to the defence manufacturing ecosystem through synergistic development of technologies, promote growth of private domestic manufacturers, including MSMEs and Start-Ups.  At present, both DICs are in their formative stages.  In the UPDIC, Uttar Pradesh Expressways Industrial Development Authority (UPEIDA), the nodal agency, has signed 55 Memorandum of Understandings (MoUs) with private industries, worth potential investments of Rs.7449.33 crore.  In the TNDIC, Tamil Nadu Industrial Development Corporation (TIDCO), the nodal agency, has signed 22 MoUs with private/public industries, worth potential investments of Rs.4800 crore.  As on 19 July, 2021, the total investment made by Public/private sector in the UPDIC and TNDIC are Rs.1236.10 crore and Rs.2252.28 crore respectively.  The production of armament/ammunition; components of aerospace industries; missile systems; and establishment of research & development facilities has been envisaged in the two DICs.  Since the two DICs are in formative stages, it may not be possible to assess the numbers of likely employment.  However,  as per present estimates reported by the respective State Governments based on MoUs signed by them with the Industries, the UPDIC has potential to generate employment for more than 16,700 persons, and the TNDIC has potential to generate employment for 25,000 persons in coming years.