Make in India: Defence Manufacturing

Shubhra SinghJoint Secretary

Department of Industrial Policy and PromotionMinistry of Commerce and Industry

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Make in India Initiative

Pillars of a new resurgent India

New Processes

New R&D

New Design

New

Mindset

New

Infrastructure

New Innovation

New Sectors

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Ease Of Doing Business

Make India the easiest and simplest place to do business

Eliminate paperwork, processes, procedures, rules &

acts Use technology to leapfrog

Converge & integrate departments

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List of 14 services Live on eBiz portal

Issue of Industrial Entrepreneur

Memorandum Issue of Industrial License

Issue of Employer Registration by Employees State Insurance Corporation

Name Availability

Director Identification

Number Certificate of

Incorporation

Commencement of Business

Issue of Permanent Account Number (PAN)

Issue of Tax Deduction Account Number

(TAN)

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Advanced Foreign Remittance (AFR)

Foreign Collaboration-General Permission Route (FC-

GPR) Employer Registration

Issue of Explosive License

Importer Exporter Code

License

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Ease of Doing Business

No minimum capital. No common seal. No declaration of commencement of business

Online & real-time registration with ESIC & EPFO, PAN &

TAN Combined returns under 8 labour laws

Documents for exports and imports reduced from 11 to 3.

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Making India part of the Global Supply Chain

Railways – 100 %

Construction – 100 %

Medical devices – 100 %

Defence – 49 % can go upto 100 % in case of modernization and state of art technology

Insurance & pension fnds – 49 %

India today is one of the most open economies of the world!

Industrial Corridors

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India as an Investment Destination

UNCTAD’s World Investment Report, 2014Ranked 4th among the Top-priority Host Economies

Japan Bank for International Cooperation: 2013 Survey Ranked 2nd Most Promising Country for Overseas Business Operations in Medium Term

Ranked Top Investment Destination in Long Term

Deloitte’s Global Manufacturing Competitiveness Index, 2013Ranked 4th in Current Competitiveness

Ranked 2nd in Competitiveness in five years

Ernst & Young’s Attractiveness Survey, 2014 (India)Continues as one of the Top Global

Destination for FDI

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DEFENCE MANUFACTURING

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India has the world’s 8th largest annual Defence Budget

Allocation of about 1.8% of its Gross Domestic Product (GDP) towards defence spending, of which 40% is allocated to capital acquisitions.

Huge opportunity in Capital procurement by Armed Forces and Homeland Security during next 7 years( >US$ 200 Bn)

Presently about 70% of its defence requirements are met through imports.

Facts & Figures

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The Indian aerospace and defence market is among the most attractive globally and the Government is keen to leverage this in order to promote Defence Manufacturing

Opportunities to avail defence offset obligations for technology up-gradation

Preference to `Buy (Indian)’ and `Buy and Make (Indian)’ over `Buy (Global)’ and `Buy and Make (Global)’ to attract foreign investment & indigenization of latest technology

Promote India as a Manufacturing hub

WIN-WIN FORMULA FOR IMPORT SUBSTITUTION & EXPORT PROMOTION

Opportunities under Make in India: Defence Manufacturing

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FDI in Defence Sector raised from 26% to 49%

Above 49% FDI, with the approval of Cabinet Committee on Security (CCS) in case of induction of modern and ‘state-of-art’ technology

Portfolio investments upto 24% under automatic route*

Condition of ownership of 51% shareholding by single largest Indian shareholder removed*

Foreign Direct Policy

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Defence items are covered under compulsory licensing under the Industries (Development & Regulation) Act, 1951.

Almost 60% items delicensed.

Applications for Industrial License are accepted online (24X7) at eBiz website – www.ebiz.gov.in

Waiting period of Industrial License brought down from 7 years to 6 months

Industrial Licensing Policy

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Procedure for grant of Industrial License (IL)has been streamlined:

• Initial validity period of Industrial License increased from 2 to 7 years, extendable to 10 years.

• Partial commencement of production is treated as commencement of production of all the items included in the license.

• Investor friendly Frequently Asked Questions (FAQs) placed on DIPP website. • Restriction of annual capacity in the Industrial License for Defence Sector has been

removed.

Procedure for sale of Defence items to Govt. Agencies liberalised

Process cleared for issue of IL for manufacture of Unmanned Aerial Vehicle (UAV) for defence use

Initiatives for Ease Of Doing Business

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Defence IL is not a pre-requisite for becoming an Indian Offset Partner

The MRO activities in Defence sector are treated as Services and don’t require IL Level playing field for Private Manufactures in Defence Sector with Defence PSUs and Ordinance Factory Board by withdrawing excise and custom duty exemption available to Ordinance Factory Board and Defence PSUs.

Relaxation in Offset guidelines.

Easing of ecosystem for promotion of Defence Exports.

Initiatives for Promotion of Defense Manufacturing

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Larsen & Toubro Ltd. Warships, Sub-marines, Weapon Platforms, High speed boats & crafts, weapon launchers - Ship & Airborne Platform Based

Bharat Heavy Electricals Ltd.

Propulsion system for ships, sub-marines, Patrol research vessels

ABG Shipyard Naval warship, sub-marines, underwater vessels, naval support ships

Bharati Shipyards Warships, Frigates, Sub-marines & Patrol boats

Major Industrial Licenses Issued in Naval Armament Sector

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Alpha Design Technologies

Naval radars

Shoft Shipyard Warship & Naval vessels

Titagarh Wagons Naval Warships & other naval vessels

HBL Power Systems Ltd.

Control & Monitoring System for Ships and Sub-marines

Pipavav Naval Vessels, Under water systems, Naval electronic warfare systems

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Parameters Karnataka Maharashtra Telangana

Mega Projects

Mega: Project cost > 250 cr <=500 cr and jobs >=250, Ultra Mega: Project Cost>500 Cr <=1,000 Cr and Jobs>=500, Super Mega: Project Cost>1,000 Cr and Jobs>=1,000

Mega: Area A &B, Fixed Capital>=750 cr or >=1,500 jobs, Area C, Fixed Capital>=500 cr or >=1,000 jobs, Area D & D+ Fixed Capital>=250 cr or >=500 jobs, Backward areas, Fixed Capital>=100 cr or >=250 jobs, Ultra Mega: Fixed Capital>=1,500 cr or >=3000 jobs

Mega: Capital Investment>= 200 Cr or >1,000 jobs

Incentives: Special Package Yes Yes Yes

Project Cost

Land, Building, P&M, pre operative expenses and working capital margin

Land, Building, P&M, Cost of development, Installation, technical know how etc) Capital Investment

Land Rebate Not Specified Only a note No YesVAT refund No Yes Yes

Electricity Duty Exemption Yes Yes Yes

Capital Subsidy Yes (Only for anchor units) No No

Interest Subsidy Yes No NoStamp Duty Exemption Yes Yes YesReimbursement of CST Yes No Yes

Package of Incentives by the State

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Parameters Madhya Pardesh Rajasthan Gujarat

Mega Projects Mega: Investment>100 CroreMega: Investment>500 Cr or Jobs>500

Mega: Investment>=1,000 cr and Jobs >=2,000

Incentives: Special Package Yes Yes Yes

Project Cost Plant & Machinery & Building

Land, Building, P&M, technical know how. 30% limit on land

Land, Plant & Machinery, Building

Other Incentives    Labour Intensive Industries Scheme

Incentives:      

Land Rebate Yes No No

VAT refund Yes Yes Yes

Electricity Duty Exemption Yes Yes No

Capital Subsidy Yes (Transfer Subsidy) No No

Interest Subsidy No No Yes

Stamp Duty Exemption No Yes No

Reimbursement of CST Yes Yes No

Package of Incentives by the State

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Parameters Haryana Tamil Nadu Andhra Pradesh

Mega Projects

Mega: Investment>100 cr or jobs >500

Mega: A: Investment 500-1,500 and Jobs: 300 in 3 years, B: Investment 350-100 and 200 jobs in 3 years C: Investment 200-500 and Jobs 100 in 4 years, Super Mega A: A: 1,500-3,000 and jobs 400 in 5 years B: 1,000-2,000 and Jobs 300 in 5 years, C: 500-1,500 and Jobs: 250 in 5 Years, Super Mega B: A: 3,000-5,000 and Jobs 600 in 6 years: B: 2,000-4,000 and Jobs: 500 in 6 years C: 1,500-3,000 and Jobs: 350 in 6 years, Ultra Mega: A: > 5,000 and Jobs 700 in 7 years, B: > 4,000 and Jobs 600 in 7 years, C: >3,000 and Jobs 500 in 7 years

Anchor Units: Investment>200 Cr and Order>=50 Cr, Mega: Investment>500 Cr or >2,000 Jobs

Incentives: Special Package Yes Yes Yes

Project Cost Plant & Machinery Building, Plant & Machinery Investment Land Rebate No No (Souther District Yes) NoVAT refund Yes No Yes

Electricity Duty Exemption

Yes (Backword regions 2012 &

2013 policy) Yes YesCapital Subsidy No No Yes

Interest Subsidy

Yes (Backword regions 2012 &

2013 policy) Yes No

Stamp Duty Exemption No Yes Yes

Reimbursement of CST No No Yes

Package of Incentives by the State

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Thank You