Aiming at Rs 35,000 cr investment in next 5 yrs, govt mulls liberal FDI norms for defence

A more liberal FDI policy is currently under consideration to attract FDI in defence sector, sources said.

The aim is to attract Rs 35,000 crore investment in the next five years, give a fillip to defence production in India and create more jobs.

Under the new norms, the government is likely to allow 100 per cent FDI under the automatic route for the production in India of tanks, armoured vehicles and military transport aircraft.

Seventy-six per cent FDI under the automatic route is proposed for fighter aircraft and helicopters.

Fifty-one percent FDI under the automatic route is proposed for submarines and warships.

All categories for which FDI under the automatic route is less than 100 per cent, this level will be allowed on a case-to-case basis where high technology is involved.

The policy is aimed at drastically cutting down defence imports from the current 70 per cent. 

Extensive discussions for further liberalising the FDI policy for the defence sector are currently on between NIti Ayog, the Defence Ministry and the DIPP (Department of Industrial Policy and Promotion). 

According to the sources, the new norms will soon be the reality.

Earlier in February this year, during the Aero India show, then Defence Minister Manohar Parrikar had said, “We are not going to allow FDI in the sector irrationally. We will do it rationally. Wherever we have competition we will not buy that from outside. Why should I allow 100 per cent foreign investment in a product which we are already making? Why should I give 100 per cent FDI where we are competing? It will be irrational move. But the route is open. I will definitely consider proposals where we do not have expertise. At least under ‘Make in India’ you will get employment, local indigenous development.” 

(With IANS inputs)