INDIA Law and Practice Contributed by: Alina Arora, Samarth Gupta and Parth Singh, Shardul Amarchand Mangaldas & Co
Shardul Amarchand Mangaldas & Co Amarchand Towers 216 Okhla Industrial Estate Phase III New Delhi 110 020 India Tel: +91 11 4159 0700 +91 11 4060 6060
Email: arun@amsshardul.com Web: www.amsshardul.com
1. Overview of the Defence Regulatory Framework 1.1 Principal Legislation and Regulatory Framework India’s defence sector regulatory framework com - prises central legislation and executive instruments issued by the Government of India (GoI). These are broadly classified as follows: • manufacturing and licensing – the Industries (Development and Regulation) Act 1951 (IDRA), the Arms Act 1959 (the “Arms Act”) and the Arms Rules 2016 (the “Arms Rules”); • government procurement – the Defence Acquisi - tion Procedure 2020 (the “DAP 2020”) and the Defence Procurement Manual 2025 (the “DPM 2025”), resting on the General Financial Rules 2017 (GFRs); • trade controls – the Foreign Trade (Development and Regulation) Act 1992 (the “FTDR Act”), the Foreign Trade Policy 2023 (FTP), and the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act 2005 (the “WMD Act”); • sanctions – the United Nations (Security Council) Act 1947 (the “UNSC Act”) and the Unlawful Activi - ties (Prevention) Act 1967 (UAPA); • security – the Official Secrets Act 1923 (OSA) and allied statutes; and • foreign direct investment (FDI) – the Foreign Exchange Management Act 1999 (FEMA), the Foreign Exchange Management (Non-Debt Instru - ments) Rules 2019 (the “NDI Rules”), and Press
Notes of the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry (MCI), GoI. 1.2 Competent Authorities No single agency, ministry or regulator has sole over - sight over all legal and regulatory aspects. Instead, oversight responsibility is distributed based on func - tion. • Ministry of Defence, GoI (MoD) – typically, the MoD is the buyer of defence equipment and responsible for implementing the DAP 2020 and DPM 2025. Additionally, the MoD (through its Department of Defence Production (DDP)) is the competent authority for defence-sector FDI approvals and the licensing authority for munitions exports. • DPIIT – the DPIIT grants and enforces industrial licences under the IDRA and arms manufacturing licences (other than for small arms) under the Arms Act, frames FDI policy, and routes FDI proposals (as nodal agency) to competent authorities, includ - ing for the defence sector. • Ministry of Home Affairs, GoI (MHA) – the MHA grants and enforces manufacturing licences for small arms under the Arms Act and the Arms Rules, grants security clearances for industrial and manufacturing licences (under the IDRA as well as the Arms Act), and grants security clearances for FDI in defence. • Directorate-General of Foreign Trade (DGFT), MCI – the DGFT is the licensing authority for dual-use exports, with primary responsibility for export con - trols enforcement.
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