Government in order to boost defence manufacturing and encourage foreign players in the sector has further simplified the defence rules and has withdrawn the excise and Customs duty exemptions enjoyed by the Ordinance Factory Board and defence PSUs. This move will provide a level-playing field by taking away the strategic advantage with PSUs for quoting lower rates in open bids. With this initiative, the government has also fulfilled demand of foreign Original Equipment Manufacturers (OEMs) such as Boeing, Airbus, Lockheed Martin, BAE Systems etc which are actively exploring the scope of future investments in India.
A statement from Ministry of Commerce and Industry said that the move will also send a definitive message to foreign OEMs that India is open to business for defence manufacturing. Almost 60 per cent items required for industrial licence have now been de-reserved. The Indian aerospace and defence market is among the most attractive globally as the country is the highest importer of defence items in the world.
Defence manufacturing is one of the key sectors among the 25 sectors identified under the Make-in-India campaign. The ministry statement added that a series of consultations have been held across ministries and departments to enable simplification of rules and procedures to promote private participation in defence manufacturing and exports. The government has already opened up the sector for private investment by increasing FDI cap in defence of up to 49 per cent and rationalising certain conditions.