Zarvan
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It is been over a year since the government eased the foreign direct investment (FDI) cap in the defence sector hoping to make India a defence manufacturing powerhouse.
However, industry players say that while steps taken so far are welcome, a lot more still needs to be done. While the liberalised FDI regime in the defence sector might not have seen big ticket investment flow in just yet, excitement remains fairly palpable within the industry.
Foreign as well as domestic players say they are in the process of lining up significant capital as the government smoothens regulatory hurdles in the sector. Collaboration and partnerships between local and global defence players seem to be the order of the day.
Rajinder Bhatia, Chief Executive Officer (CEO) of Bharat Forge told CNBC-TV18, “In the last 3 years, we have set up three joint ventures (JVs) – two with reputed foreign companies.”
Bhatia further says that the first JV came in at 26 percent FDI limit. The company is in discussion with at least 2 European majors for similar investment conversations, he adds.
Global players eyeing the Indian shores
One of the largest foreign defense players in the world, Lockheed Martin has signed an agreement to invest in the Indian defence sector during Prime Minister Narendra Modi's recent visit to the USA.
“We need business entities to conduct business here. With an FDI of over 49 percent, we need a business entity to manage current and on-going projects,” Phil Shaw, CEO of Lockheed Martin says adding that “we were very glad that the government approved the clearance of the business entities because that gives us a huge impetus.”
While foreign players are setting shop in the country, domestic companies are keen on strategic acquisitions to beef up their defence manufacturing prowess.
SP Shukla, President - Aerospace & Defence of Mahindra & Mahindra says that: “We operate across Army, Navy and Air Force, so we are looking at acquisitions across all three.”
The road to India becoming a global defence manufacturing power house, however, is expected to be a long one.
“If you talk about Indian industry coming to that level that we say that we have vibrant defense sector, (then) we are still a long way. Another 5 years time at least for that,” Bhatia says.
Industry players say the next 5 years will be crucial in defining the fortunes of the India’s defense manufacturing sector. Experts add that quick resolution of legacy issues by the government can go a long way in achieving the aim of making India a defence manufacturing hub.
Long way for India to become defence manufacturing hub
ros - Moneycontrol.com
