Make in India: MoD notifies DTIS to attract the private sector companies

By: |
Published: August 6, 2019 3:59:51 PM

The main idea behind the proposed Scheme is to strengthen indigenous defence production, and to encourage the participation of MSMEs and Start-Ups by bridging gaps in defence testing infrastructure.

Make in India, Ministry of Defence, DTIS, private sector companies, Special Purpose Vehicle, Public Sector UndertakingsTo encourage the private sector companies to participate in the defence sector, the government has announced the establishment of two Defence Industrial Corridors (DICs) in Uttar Pradesh and Tamil Nadu.

To address the lack of easily accessible state-of-the-art testing infrastructure for the private sector companies in the Defence sector, the Ministry of Defence (MoD) has notified the Defence Testing Infrastructure Scheme (DTIS), with associated guidelines for its implementation.

The main idea behind the proposed Scheme is to strengthen indigenous defence production, and to encourage the participation of MSMEs and Start-Ups by bridging gaps in defence testing infrastructure.

Also read: Army Commander reviews security in Northern Command; another intrusion bid foiled by the Indian Army

According to the MoD, under “Make in India”, a high priority has been given to the development of the manufacturing base of Defence and Aerospace sectors in the country, in an effort to reduce the dependence on imports. Since the Defence Testing Infrastructure is capital intensive requiring regular up-gradation, and deters the individual defence industrial units for setting up in-house testing facilities as it is not economically viable.

To encourage the private sector companies to participate in the defence sector, the government has announced the establishment of two Defence Industrial Corridors (DICs) in Uttar Pradesh and Tamil Nadu. And has also announced several initiatives taken which include simplification of licence procedures, export permissions, level playing field vis-à-vis Public Sector Undertakings. The Make-II procedure too has been simplified, and Defence investor cell and Defence innovation organization have been set up.

It has been proposed that the Scheme would provide financial assistance to the private sector for setting up Testing and Certification facilities for manufacturers of defence equipment and systems. Also, the financial assistance from the government is going to be in the form of Grant-in-Aid limited to sum total of Rs 400 crore for setting up of Greenfield Defence Testing Infrastructures (DTIs) in several verticals. These will include testing facilities for Drones / Unmanned Aerial Vehicles (UAVs)/Remotely Piloted Aircraft (RPAs); Electronic Warfare; Rubber Testing for Defence and Aerospace Sectors; and any other area in Defence manufacturing lacking testing infrastructure.

Though, the DIC in both UP and Tamil Nadu is expected to be given preference for setting up of DTIs, the Scheme is not limited to the DIC, MoD has stated. These corridors have been selected as they are expected to support a large number of industries involved in defence and aerospace manufacturing in the future.

Each DTI will be set up through a Special Purpose Vehicle (SPV) to be constituted by at least 7 private entities will be registered under Companies Act of 2013. Besides having a positive net worth, these private entities should not have been blacklisted by the Central or State Government.

For using the testing scheme, the SPV shall be responsible for obtaining statutory clearances required for testing of weapons and ammunition.

It has also been clarified that the cost of land is not proposed to be funded under the DTIS, as the land is expected to be arranged by the SPV (Implementation Agency).

It will be the responsibility of the Implementation Agency to execute an undertaking for proper utilization of the grant and meet the deadlines as may be specified in the conditions of the Grant and to ensure that the grant is not diverted for any other purposes.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.