Indigenization of Indian Defence Industry
India is the world’s largest importer of defence equipment, with 60% of
its requirements met from outside the country. This, in itself,
translates into a great business opportunity for those building domestic
capabilities in defence.Foreign direct investment (FDI) in India is the
major monetary source for economic development in India. Foreign
companies invest directly in fast growing private Indian businesses to
take benefits of cheaper wages and changing business environment of
India.
Hundred per cent foreign direct investment in defence manufacturing
has been termed the need of the hour with senior government officials
pushing for the inclusion and participation of foreign companies in the
manufacture of military transport aircraft, battle tanks and armoured
vehicles.
Finance Minister Arun Jaitley had held a meeting with government officials recently and conducted a review of the current Foreign Direct Investment (FDI) policy. The government has been looking to further liberalise the FDI regime to attract foreign investments in various sectors, including defence and retail.
Government of India has taken a number of measures to increase the participation of Indian companies in the Defence Sector. From liberalizing the licencing regime to making remarkable changes in the Defence Procurement Procedures, according AONs on the Make in India platform provided by the Buy Indian, Buy and Make Indian and Make provisions of the DPP, the government has done all that it could to energize the Indian Defence Industry. Easing of provisions of NOC for exports through timebound online processes has been accomplished and Populating the SCOMET chapter on Defence products, which hitherto has been vacant for a long time, is a work in progress as is the membership to various control regimes. In consonance with all of this the government has also revisited the extant FDI policy and brought it in sync with the other policies and procedures, by taking a bold step of inviting FDI in the Defence Sector upto 100% with a 49% through the automatic route. FIPB is also being eased out to simplify processes.
Finance Minister Arun Jaitley had held a meeting with government officials recently and conducted a review of the current Foreign Direct Investment (FDI) policy. The government has been looking to further liberalise the FDI regime to attract foreign investments in various sectors, including defence and retail.
Government of India has taken a number of measures to increase the participation of Indian companies in the Defence Sector. From liberalizing the licencing regime to making remarkable changes in the Defence Procurement Procedures, according AONs on the Make in India platform provided by the Buy Indian, Buy and Make Indian and Make provisions of the DPP, the government has done all that it could to energize the Indian Defence Industry. Easing of provisions of NOC for exports through timebound online processes has been accomplished and Populating the SCOMET chapter on Defence products, which hitherto has been vacant for a long time, is a work in progress as is the membership to various control regimes. In consonance with all of this the government has also revisited the extant FDI policy and brought it in sync with the other policies and procedures, by taking a bold step of inviting FDI in the Defence Sector upto 100% with a 49% through the automatic route. FIPB is also being eased out to simplify processes.
Where is FDI in all of this?
FDI is not a magic wand with all the solutions for the Defence Industry. However, it is also a fact that very little has happened in this space. Is this because of the lack of confidence of the foreign OEMs and their governments in the ease of doing business in India? Is this because of the bureaucratic lethargy in extra-ordinary delays in decision making to push programs through? Or is this because the nation cannot fund the programs for the Forces and hence a deliberate delay is caused sometimes tending to infinity. All of this causes uncertainty in the minds of the industry, both, domestic and foreign.
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