DIPP clears 33 defence proposals

A meeting of the Licensing Committee of the DIPP has cleared 33 pending defense deals, some of which have been languishing with the DIPP for yeards. The defence proposals were by Reliance Aerospace, Bharat Forge, Mahindra Telephonic Integrated Systems Ltd, Punj Lloyd Industries, Mahindra Aero Structure Pvt Ltd, Tata Advanced Materials Ltd etc.
The DIPP has been able to clear these defence proposals now because of the regulatory and policy changes .

Changes in Policy/Regulations

The FDI limit in the defence sector has been increased to 49% from 26%. The government reduced the number of items requiring industrial licenses by 60% in June 2014, so a vast number of items have been delicensed and do not require items anymore. Also, dual use items, meaning products which are of use to military as well as civilians, do not require defence clearances. Hence, multiple industries now require no licenses but only have to submit an IEM. Further 24% portfolio investment through the automatic route is now allowed. And the requirement of 51% ownership by a single Indian company has been removed, with multiple Indian companies holding a cumulative share of 51% being sufficient.
Also, these clearance are in line with the PM’s Make in India campaign which calls for increased domestic production by industries based in India.

 IEM (Industrial Entrepreneurs Memorandum)

IEM is an application which is while is filed by the company/industrial unit for acknowledgement of its unit. Industries requiring investment of over a certain amount in large scale and small industry respectively are exempt from licensing provisions; these industries, instead, have to file an IEM.



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