Government Initiates Exercise to Raise FDI in Defence to 100 Per Cent: Report

[NKVD]

In a major policy initiative, the government is proposing to raise foreign direct investment (FDI) in defence sector to 100 per cent through the approval route, according to sources.

"The Commerce and Industry ministry has circulated a Cabinet note for inter-ministerial consultation," they told PTI.

The proposal to raise FDI cap in defence from 26 per cent to 100 per cent is aimed at giving a boost to manufacturing activities.

As per the 15-page Cabinet note circulated on Thursday, portfolio investors, including foreign institutional investors (FIIs), would be permitted to invest only up to 49 per cent.

Further, the note said that a foreign company can even take over a domestic entity provided it brings in state-of-the-art technology.

This is the first major initiative of the ministry after new Commerce and Industry Minister Nirmala Sitharaman took charge this week.

Sources said that permitting FDI in the sector "will hugely help in reducing import bill for defence equipment" and "will help in boosting manufacturing and creating jobs".

The UPA government had pegged FDI in the defence sector at 26 per cent but allowed the Cabinet Committee on Security (CCS) to approve proposals entailing higher investments.

In May 2010, the Department of Industrial Policy & Promotion (DIPP) had rolled out a discussion paper suggesting increase in FDI cap for the defence sector.

India opened up the defence equipment industry to private sector in May 2001, but restricted foreign participation to 26 per cent in this capital-intensive and sensitive sector.

India is one of the largest defence importers in the world with a minuscule component of exports.

India ranks among the top ten countries in the world in terms of military expenditure. At present, it imports over $8 billion worth of defence equipment and its defence budget is growing at an average of 13.4 per cent annually since 2006-07.

"The bulk of the domestic production is met either through the Ordnance Factories or the Defence PSUs. Even when defence products are manufactured domestically, there is a large component of imported sub-systems," the DIPP had said.

Government Initiates Exercise to Raise FDI in Defence to 100 Per Cent: Report - NDTVProfit.com

Govt moves to hike defence FDI up to 100% - The Times of India

DIPP proposes 100% FDI in defence sector - The Economic Times

Govt initiates exercise to raise FDI in defence sector to 100% | Business Standard

@sancho @Abingdonboy @SpArK @JanjaWeed @arp2041 @chak de INDIA @Reviewer21

 

[Reviewer21]

Can anyone clear my doubts regarding FDII . am confused whether it'll benefit or Harm India's indigenous sector. There's written three types of FDI I.e. 49, 74 & 100 percent FDI. So my doubt is what will be the role of Indian and foreign companies in thesE and how it'll work..

 

[SrNair]

Report was correct.GoI inititated plan for FDI in defence.

Can anyone clear my doubts regarding FDII . am confused whether it'll benefit or Harm India's indigenous sector. There's written three types of FDI I.e. 49, 74 & 100 percent FDI. So my doubt is what will be the role of Indian and foreign companies in thesE and how it'll work..

Virtually we dont have a credible indigenous defence industry.DRDO is a research organization,missile development single handedly stealing most of its resources .Unless LCA HAL is an assembling unit.OFB is a joke without any credible products.And private groups are just a supporting group.So this policy will help us immensely.And it will also increase the competition of Defense PSU and Private sector.

 

[Reviewer21]

It'll be on partnership right between Indian and foreign companies. Or they'll be also allowed to operate solely?

Report was correct.GoI inititated plan for FDI in defence.



Virtually we dont have a credible indigenous defence industry.DRDO is a research organization,missile development single handedly stealing most of its resources .Unless LCA HAL is an assembling unit.OFB is a joke without any credible products.And private groups are just a supporting group.So this policy will help us immensely.And it will also increase the competition of Defense PSU and Private sector.

 

[SrNair]

It'll be on partnership right between Indian and foreign companies. Or they'll be also allowed to operate solely?

I also have a doubt about that.But at any case they cant operate solely in India.Our companies dont like that and GoI and MoD knows the danger behind that move.
The sole purpose of 100% FDI in defence is to increase the jobs and acquiring state of art tech from other companies .So we cant do that with out Indian and Foreign participation.They technology of foreign companies will gradually acquired by Indian companies.
So it will be a Indian-foreign participation.