In order to attract more overseas inflows, the government is now considering further relaxing foreign direct investment (FDI) norms in the defence sector. In a meeting attended by industry chambers including CII and FICCI, the ministry asked the stakeholders suggestions for changes in FDI policy to attract foreign investors.
In India presently FDI up to 49 per cent is permitted in the sector through automatic route and beyond that up to 100 per cent via government nod is permitted. Government is the only procurer of defence equipment in the country, besides, the export of defence products from India is also very regulated. At the meeting industry experts stated that foreign investors seek assured orders before setting up manufacturing unit in any country.
The government had recently cleared the Strategic Partnership (SP) policy to create a vibrant defence manufacturing ecosystem in the country through involvement of both the major Indian corporates as well as the MSME sector. The policy is also likely to reduce current dependence on imports and gradually ensure greater self-reliance & dependability of supplies essential to meet national security objectives.