NEW DELHI (PTI): In a major policy initiative, the government of India is proposing to raise FDI in defence sector to 100 per cent through the approval route.
"The Commerce and Industry ministry has circulated a Cabinet note for inter-ministerial consultation," sources told PTI.
The proposal to raise FDI cap in defence from 26 per cent to 100 per cent is aimed at giving a boost to the manufacturing activities.
As per the 15-page Cabinet note, which was circulated on Thursday, portfolio investors, including FIIs, would be permitted to invest only up to 49 per cent.
Further, the note said that a foreign company can even take over a domestic entity provided it brings in state-of-the art technology.
This is the first major initiative of the ministry after new Commerce and Industry minister Nirmala Sitharaman took charge this week.
Sources said that permitting FDI in the sector "will hugely help in reducing import bill for defence equipment, will help in boosting manufacturing and creating jobs".
The UPA government had pegged FDI in the defence sector at 26 per cent but allowed Cabinet Committee on Security (CCS) to approve proposals entailing higher investments.
In May 2010, DIPP had rolled out a discussion paper suggesting increase in FDI cap for the defence sector.
India opened up the defence equipment industry to private sector in May 2001, but restricted foreign participation to 26 per cent in this capital-intensive and sensitive sector.
India is one of the largest defence importers in the world with a minuscule component of exports.
It ranks among the top ten countries in the world in terms of military expenditure. India at present imports over USD 8 billion worth of defence equipment and its defence budget is growing at an average of 13.4 per cent annually since 2006-07.
"The bulk of the domestic production is met either through the Ordnance Factories or the Defence PSUs. Even when defence products are manufactured domestically, there is a large component of imported sub-systems," DIPP had said.
Govt initiates exercise to raise FDI in defence sector to 100%
Article Posted on : - May 30, 2014
Other Related News
Come up with ideas, products that become necessity of armed forces: Defence Minister
Defence Minster Rajnath Singh has exhorted the defence industry stakeholders and innovators to come up with new ideas and translate them into products, so that the Armed Forces would feel that they were incomplete without these equipment.
The Indian Air Force, in its flight trials evaluation report submitted before the Defence Ministry l..
view articleAn insight into the Medium Multi-Role Combat Aircraft competition...
view articleSky enthusiasts can now spot the International Space Station (ISS) commanded by Indian-American astr..
view article