FAQs on Industrial Licensing in Defence Sector

A.1 Ministry of Home Affairs (MHA) vide its Notification S.O. 1636(E) dated 19.05.2017 clarified that Small Arms and Ammunition (Caliber upto 12.7 mm) would be licensable under Arms Act, 1959/Arms Rules, 2016 for which MHA would be the Licensing Authority. For items viz. tanks and other armoured fighting vehicles, defence aircrafts, spacecrafts, warships of all kinds, arms and ammunition and allied items of defence equipment other than small arms would be licensable under Arms Act, 1959/Arms Rules, 2016 for which Ministry of Commerce & Industry, DIPP would be the Licensing Authority. The rest of the items which are not mentioned in the above MHA Notification but are mentioned in Press Note No. 3 of 2014 Series would be covered under DIPP under the Industries (Development & Regulation) Act, 1951. A copy of the Arms Rules, 2016 is available on the websites of Department of Industrial Policy & Promotion (www.dipp.gov.in) and Ministry of Home Affairs (www.mha.nic.in). No IL is required for undertaking manufacturing of the items not listed in the said defence products list.
A.2 Defence industrial license is not necessary for the items which have dual use except those items which are mentioned in the Press Note 3 of 2014 Series dated 26/06/2014.
A.3 On perusal of clause (31) and clause (37) of the Arms Rules, 2016 amplifies that manufacturing under the Arms Rules, 2016 is confined to manufacture of a complete firearm or pressure-bearing part or component of a firearm only. All other parts or components, being non pressure-bearing, are out of the ambit of the definition of manufacturing under clause (31). Industrial licence is not required for undertaking manufacturing of items such as parts, components, castings, forgings and test equipments etc for which items are licensable under I(D&R) Act, 1951 of DIPP.
A.4 All applications for grant of license for manufacture of Small Arms (caliber upto 12.7 mm) are to be made directly to Ministry of Home Affairs in Form A-6 along with security clearances proforma manually to Under Secretary (Arms Section), Ministry of Home Affairs, Major Dhyan Chand National Stadium, IInd floor, Near India Gate, New Delhi.
All applications for grant of license for manufacture of arms and ammunitions (caliber above 12.7 mm) configured for defence purposes viz. tanks and other armoured fighting vehicles, defence aircrafts, spacecrafts, warships of all kinds, arms and ammunition and allied items of defence equipment other than small arms as indicated in the schedule to the MHA Notification dated 19.05.2017, are to be made to DIPP in Form A-6 at Industrial License Section, Department of Industrial Policy and Promotion, UdyogBhawan, New Delhi.
All other applications for the rest of the items which are not mentioned in the MHA Notification dated 19.05.2017 but are mentioned in Press Note No. 3 of 2014 Series are to be made online on ebiz portal provided at DIPP’s website (www.dipp.nic.in).
A.5 Vide MHA Arms Rules, 2016, the licence granted by MHA and powers delegated to DIPP under Arms Act, 1959 for manufacturing shall now be valid for the life-time of the licensee company. Vide DIPP’s Press Note 10 (2015 Series) dated 22/09/2015, the initial validity of Industrial License for defence sector has been revised to 15 years, which is further extendable upto 18 years.
A.6 Ministry of Defence, Department of Defence Production is the Administrative Ministry for grant of extension of Industrial licence under the I(D&R) Act, 1951 to the private sector. The Company may send their IL extension application to Contract Purchase Officer, Department of Defence Production, Ministry of Defence, D(DIP) Section, SenaBhawan, New Delhi
A.7 The Licensed Defence Company in the private sector after obtaining industrial licence is required to follow the security architecture provided in the Security Manual for Licensed Defence Industries available at Department of Defence Production’s website (www.ddpmod.nic.in) based on their categorization
A.8 Maintenance, Repair and Overhaul (MRO) activities in defence sector may be treated as services and should not be subjected to the industrial licence under IDR Act unless it actually involves manufacturing of any components/sub-assemblies which are licensable and that the product should remain the property of the same customer after MRO operation.
A.9 Yes, an industrial licence is required from defence angle for undertaking upgrade of licensable defence items.
A.10 The licence fee ranges from a minimum of Rs. 5000/- to the maximum of Rs. 50,000/- which is to be paid at the time of grant of license for items falling under Arms Act, 1959.
A.11 Till October, 31, 2017, DIPP has issued 342 industrial licenses to 205 Indian companies in defence sector.