Defence equipment import to be exception: Govt in Rajya Sabha

The defence ministry said import of defence equipment from a foreign industry, irrespective of value and type of acquisition, should only be an exception

The defence ministry on Monday said import of defence equipment from a foreign industry, irrespective of value and type of acquisition, should only be an exception, and it will require prior approval at the top level.

Minister of State for Defence Ajay Bhatt, replying to a question in the Rajya Sabha, said the approval for such import has to be accorded by the Defence Acquisition Council (DAC) or by the defence minister.

He said an amendment incorporating the provision in the Defence Procurement Procedure (DAP), 2020 was approved by the DAC last month with an aim to provide further impetus to the domestic defence industry.

The DAC headed by the defence minister is the highest decision-making body of the ministry on procurement.

"It has been decided that any import of defence equipment/sourcing from foreign industry, irrespective of value and type of acquisition should only be an exception requiring specific approval of DAC/Raksha Mantri," Bhatt said.

He also said that the requirement 'Integrity Pact Bank Guarantee' (IPBG) has been dispensed with to reduce financial burden on Indian industry involved in supply of defence equipment.

"Earnest Money Deposit (EMD) has been introduced as a bid security and pre-contract integrity pact (PCIP) cover till the conclusion of the contract," he said.

"Post conclusion of contract, Performance cum Warranty Bank Guarantee(PWBG) to provide the PCIP cover. For projects up to Rs 100 crore and for MSMEs and Start-ups, EMD requirement has been waived," he added.

In the last few years, the government has taken a series of measures to promote domestic defence production.

India is one of the largest importers of arms globally. According to estimates, the Indian armed forces are projected to spend around USD 130 billion (one billion is equal to Rs 100 crore) in capital procurement in the next five years.

The government now wants to reduce dependence on imported military platforms and has decided to support domestic defence manufacturing.

The Defence Ministry has set a goal of a turnover of USD 25 billion (Rs 1.75 lakh crore) in defence manufacturing in the next five years, including an export target of USD 5 billion (Rs 35,000 crore) worth of military hardware.