Industrial Licence Validity for Defence Raised to 15 years

The government has extended the validity of industrial licence for defence sector for the second time this year, increasing it to 15 years with provision for a further extension of three years to promote defence manufacturing and ease of doing business.

In April, the government had increased the validity of the licence to seven years, with provision for extending it up to 10 years.

“This is being done as a measure to further promote ease of doing business, in view of the long gestation period of defence contracts to mature,“ the Department of Industrial Policy and Promotion (DIPP) said in a press note.

In case a licence has already expired the licensee will have to apply for a fresh licence, the note said.

Stepping up defence production in India to make do with minimum imports is a crucial element of the Narendra Modi government's `Make in India' campaign.

Since assuming office in May last year, the government has in a series of measures aimed at freeing up the sector raised the foreign in vestment limit in defence to 49% from 26%, delicensed man products that were reserved for the defence sector and also raised the validity of industrial licences for the sector.

In cases where state-of-the-art technology is being provided in the country, foreign investment can even go up to 100%, as per the rules.

In October, the government had also decided to remove the cap on annual capacity for production of defence items. Only the actual production has to be reported biannually. India bought Rs.25,000 crore worth of defence equipment from abroad in 2014-15, down from Rs.35,000 crore a year ago. In all, 287  industrial licenses have been issued till date for defence sector, of which 70 have been given out since June last year. India is currently at 142nd position in the World Bank's ease of doing business rankings.

The Economic Times, New Delhi, 23rd Sept. 2015