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The government has permitted <keyword id="44749" type="ORGANIZATION" weightage="20" keywordseo="Foreign-Direct-Investment">foreign direct investment</keyword> (FDI) of up to 74 per cent under the automatic route in the defence sector with a view to attracting overseas investors, according to a press note issued by the DPIIT on Thursday. However, foreign investments in the defence sector would be subject to scrutiny on the grounds of national security and the government reserves the right to review any foreign investment in the sector that affects or may affect national security, the Department for Promotion of Industry and Internal Trade (DPIIT) said in the note. As per the current FDI policy, 100 per cent overseas investments are permitted in the defence industry -- 49 per cent under the automatic route, while beyond that government approval was required. According to the Press Note 4 (2020 series): "FDI up to 74 per cent under automatic route shall be permitted for companies seeking new industrial licences". It also said that infusion of fresh investment up to 49 per cent, in a company not seeking industrial licence or which already has government approval for FDI in defence, shall require "mandatory" submission of a declaration with the defence ministry in case change in equity/shareholding pattern or transfer of stake by existing investor to new foreign investor for FDI up to 49 per cent, within 30 days of such change. Proposal for raising FDI beyond 49 per cent from such companies will require government approval, it added. "The decision will take effect from the date of FEMA (Foreign Exchange Management Act) notification," it said. The decision to permit up to 74 per cent FDI in the <keyword id="2377476" type="PERSON" weightage="20" keywordseo="defence-manufacturing">defence manufacturing</keyword> through the automatic route was announced by Finance Minister Nirmala Sitharaman in May while announcing the fourth tranche of the Rs 20 lakh crore stimulus package for the coronavirus-hit economy. In July 2018, the government had relaxed foreign direct investment norms in the defence sector by allowing up to 49 per cent FDI under the automatic route. The move was aimed at boosting domestic industry as India imports about 70 per cent of its military hardware. According to the DPIIT data, defence industries has received FDI equity inflows of USD 9.52 million (Rs 56.88 crore) during April 2000 and March 2020. Under the government route, foreign investors have to take prior approval of the respective ministry/department, while in the automatic route, the investor just has to inform the RBI after the investment is made. Total FDI into India increased by 18 per cent to USD 73.45 billion in 2019-20. SEE ALSO: <a href="https://www.businessinsider.in/sports/news/dailyhunt-app-founders-confirm-ipl-2020-associate-sponsorship/articleshow/78169667.cms">EXCLUSIVE: Dailyhunt founders confirm IPL 2020 associate sponsorship — promise new release for Josh ahead of India’s biggest cricket tournament</a> <a href="https://www.businessinsider.in/stock-market/markets/news/hcl-tech-enters-the-list-of-top-10-most-valued-companies-in-india/articleshow/78165311.cms">HCL Tech enters the list of top 10 most valued companies in India</a> <a href="https://www.businessinsider.in/science/space/news/first-intact-planet-found-circling-a-dead-star-this-jupiter-sized-anomaly-is-in-orbit-rather-than-being-pulled-apart-at-the-seams/articleshow/78166938.cms">First 'intact' planet found circling a dead star — this Jupiter-sized anomaly is in orbit rather than being pulled apart at the seams</a>

Foreign investors can now pump in up to 74 % FDI under automatic route in India's defence sector

The government is likely to give nod to a higher limit of foreign direct investment (<keyword id="44528" type="ORGANIZATION" weightage="100" keywordseo="FDI">FDI</keyword>) in <keyword id="6360676" type="CITY" weightage="100" keywordseo="Railways">railways</keyword> and <keyword id="32723" type="COMPANY" weightage="100" keywordseo="Defence">defence</keyword>. However, the plan to allow FDI in e-commerce has been put on hold. 
 
FDI up to 100% would be allowed under the automatic route in railway infrastructure projects, including projects like high-speed trains, sub-urban and dedicated freight corridors under public-private partnership (PPP) mode. 
 However, in strategic border areas, companies may need prior permission from the <keyword id="1382761" type="ORGANIZATION" weightage="100" keywordseo="Foreign-Investment-and-Promotion-Board">Foreign Investment and Promotion Board</keyword> (FIPB). 
“Due to security concerns in border areas, there is a view that clearance from the ministry of home affairs should be taken,” said an official. 
 
In defence sector, the FDI limit of 26% would be raised to 49%. 
 The <keyword id="120170" type="ORGANIZATION" weightage="100" keywordseo="Cabinet-Committee-on-Economic-Affairs">Cabinet Committee on Economic Affairs</keyword> has already approved 49% FDI in the insurance sector. 
 
But the government is unlikely to allow FDI in e-commerce as of now as it is of the view that it could impact domestic players.

FDI In Defence, Railways To Be Increased

The Confederation of Indian Industries (<keyword id="6358345" type="ORGANIZATION" weightage="100" keywordseo="CII">CII</keyword>) has welcomed the central government's move to raise the limit on <keyword id="44749" type="ORGANIZATION" weightage="100" keywordseo="Foreign-Direct-Investment">foreign direct investment</keyword> (FDI) in the <keyword id="32723" type="COMPANY" weightage="100" keywordseo="Defence">defence</keyword> sector. 
 "FDI is directly linked with core national priorities such as raising manufacturing growth to 25% of the <keyword id="35050" type="CITY" weightage="80" keywordseo="gdp">GDP</keyword>, significant job creation and bringing high-end technology into the country. The associated benefits are the spin-offs for the civilian market,” a CII statement said. 
 
CII is keen to see high-tech system integration work being done in India and it is ready to take this challenge and opportunities. Opening up various sectors have helped the growth of industry. 
 
The manufacturing sector in the country has grown in the last two decades, riding on robust domestic demand and increasing private participation. India has already made its mark in the automobile sector with a number of auto brands across the world sourcing from India, the statement said. 
 
At present, the defence sector contributes between 2.5% and 3% of the global GDP but India's share is too low. India can leverage its purchasing power, IT infrastructure and manufacturing potential to be one of the key global manufacturing hubs for defence systems and equipment, the CII noted. 
 
Raising FDI in the defence sector will create more opportunities in the country. CII said it would endorse the government's initiatives of linking FDI with exports. It also stressed on the need to revisit the export policy and recommended that policies should be industry-friendly and less ambiguous.

Industry Bats For FDI In Defence

India increased its military expenditure for FY2014-15 to Rs 2.29 lakh crore - an increase of 12.5% over the previous financial year. In his maiden budget, <keyword id="6355261" type="POSITION" weightage="100" keywordseo="Finance-minister">Finance Minister</keyword> <keyword id="42575" type="PERSON" weightage="100" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>, who also holds the <keyword id="32723" type="COMPANY" weightage="100" keywordseo="Defence">defence</keyword> portfolio, allowed up to 49% foreign direct investment (<keyword id="44528" type="ORGANIZATION" weightage="100" keywordseo="FDI">FDI</keyword>) in defence to boost the development of indigenous hardware. 
 
Jaitley allocated Rs 5,000 crore more than the Rs 2.24 lakh crore allocated in the interim budget presented by the UPA government in February. The defence sector was allocated Rs 2,03,672 crore in FY2013-14. 
 
The finance minister raised the FDI cap in the defence sector from 26% to 49% to attract investments from global arms firms. 
 
"There can be no compromise with the defence of our country. I, therefore, propose to allocate an amount of Rs 2,29,000 crore for the current financial year for defence," Jaitley said in his budget speech in the Parliament. 
 
"Modernisation of the armed forces is critical to enable them to play their role effectively in the defence of India's strategic interests. I, therefore, propose to increase the capital outlay for defence by Rs 5,000 crore over the amount provided for in the Interim Budget," he said. 
 
India has been repeatedly expressing concern over China's rapid development of rail and road infrastructure along the disputed border, including those in Arunachal Pradesh. 
 
"Our domestic manufacturing capacities are still at a nascent stage. We are buying substantial part of our defence requirements directly from foreign players. Companies controlled by foreign governments and foreign private sector are supplying our defence requirements to us at a considerable outflow of foreign exchange," said Jaitley. 
 
"Currently we permit 26% FDI in defence manufacturing. The composite cap of foreign exchange is being raised to 49 per cent with full Indian management and control through the FIPB route," he said.

Jaitley Gives FDI Push To Defence

Going by the data presented by Minister of State for Defence Rao Inderjit Singh in parliament on Tuesday, the <keyword id="6412360" type="UNKNOWN" weightage="20" keywordseo="Defence-Sector">defence sector</keyword> stood at the bottom of the list of sectors that received foreign investment this year with merely Rs 56 lakh in its kitty. 
 This is despite the persistent government efforts to market India as a defence manufacturing hub ever since last year when the norms were eased by the <keyword id="65795" type="ORGANIZATION" weightage="20" keywordseo="BJP-government">BJP government</keyword> last year in August, including FII <keyword id="6362476" type="ORGANIZATION" weightage="20" keywordseo="investments">investments</keyword> upto 24 percent on automatic route. 
 This dismal <keyword id="44528" type="ORGANIZATION" weightage="20" keywordseo="FDI">FDI</keyword> inflow was the reason why another set of big changes was announced by the government in November in defence FDI. The changes included FDI upto 49 percent through automatic route, permissions to be taken from FIPB beyond 49 percent, besides FVCI and portfolio being also permitted 49 pc through automatic route. 
 However, while the government made it easier for foreign investors to venture into the defence <keyword id="6395867" type="UNKNOWN" weightage="20" keywordseo="manufacturing-sector">manufacturing sector</keyword>, it shied away from being liberal on the FDI limit, capping it to 49 percent under the new automatic process, a bone of contention for investors who desire a controlling stake. 
 
Other significant sectors like Glue and Gelatin, Dye Stuff and Scientific Instruments beat the investments into the defence sector exponentially. 
 
(image credit: BCCL)

Government fails to attract FDI in Defence Industry, only Rs 56 lakh since Sept last year

The Ministry of Defence will soon come out with a new set of guidelines and norms that will work as Standard-Operating-Procedures (SOP) for foreign companies seeking higher ownership beyond the existing 49% foreign direct investment (FDI) that is currently allowed in defence production.<o:p></o:p>
 India’s <keyword id="2619377" type="UNKNOWN" weightage="20" keywordseo="defence-minister-Manohar-Parrikar">Defence Minister Manohar Parrikar</keyword> has already stated that he was open to considering higher FDI in defence production on a case-to-case basis. However, presently, there are no guidelines or SOP in place to decide on cases where higher foreign ownership is proposed.

	“India may soon announce guidelines to increase the 49% cap on foreign direct investment (FDI) in defence production allowing foreign companies, with the latest cutting edge technology, to set shop in the country. These guidelines are being finalised so that the department of defence can take a view on the dozen odd proposals by leading global players,” said a senior government official.<o:p></o:p>

	At a recent meeting of the top brass of defence ministry with the industry, it was indicated that the norms and guidelines for allowing over 49% FDI in defence production are being finalised.<o:p></o:p>

	Sources in the know said a draft Cabinet note has been readied in this regard following inter-ministerial consultations on the issue of higher FDI in defence production.

	However, as against having fixed norms, the department of defence is understood to have proposed taking a view on a case to case basis and on the merits of the proposal.<o:p></o:p>

	French company DCNS has proposed to set up a wholly-owned Indian subsidiary to develop advanced systems for submarines.

	“Many foreign companies have approached the government to set up wholly owned Indian subsidiaries to develop crucial modern defence systems. But due to lack of guidelines, the clarity is missing and global companies have expressed concerns on the same. These new guidelines will detail a specific roadmap for international companies that are planning to make big investments in India’s defence production,” an official said.<o:p></o:p>

	“Our FDI norms will need to watch out for the real intents and the encumbrances on the technology flow through export controls and denial regimes to make Make-in-India a success,” he said.<o:p></o:p>

	“The caution indeed has to be exercised as going by the past experience, whenever a new sector is opened up there is a honeymoon time that gets in many new entrants. Aviation sector is one such glaring example to point. All new entrants use high pitch and try to create differentiators but they will have to eventually deliver promises through building shear track record through physical delivery on a sustained basis,” said an industry source.<o:p></o:p>

	So while the government puts in place these new norms and guidelines, care needs to be taken that this does not result in mere creation of a “front” but instead build skill sets and capabilities to enhance indigenous content.<o:p></o:p>

	The need of the hour is to create centres of excellence to enhance not only the indigenous content but gradually built sustainability through geographic spread of markets in a calibrated way, said an industry leader.<o:p></o:p>

	This, he said, is welcome as the Indian requirements are diverse and technologies constantly move with time needing fresh inputs in technology all the time.

	​(Anupama Airy is the Founder and Editor of EnergyInfraPost.com and DefenceAviationPost.com. She can be reached at <a href="mailto:anupama.airy@gmail.com" target="_blank">anupama.airy@gmail.com</a>​, Twitter handle: @anupamaairy)

	<o:p> </o:p>

Foreign cos can own up to 74% in Indian defence soon, on a case-to-case basis

NEW DELHI: The <keyword id="6355512" type="ORGANIZATION" weightage="20" keywordseo="Union-Cabinet">Union Cabinet</keyword> on Wednesday allowed foreign investment in the Railways for the first time and raised limit for such investment in the defence sector, steps intended to raise funds for expansion of the Railways and encourage domestic manufacture of arms. 
 
100 per cent foreign investment in railway infrastructure projects will be allowed while in the case of defence the limit has been raised to 49 per cent from the current 26 per cent, subject to the Indian owners exercising management control. 
 The <keyword id="44528" type="ORGANIZATION" weightage="20" keywordseo="FDI">FDI</keyword> hike in defence is intended to cut imports by indigenising defence production as India is one of the world’s largest arms importers. 
 "It is a composite cap, incorporating all forms of foreign investment, FDI, FII, FPI, NRI, etc," said a <keyword id="6542458" type="POSITION" weightage="20" keywordseo="Government-official">government official</keyword> confirming that the proposals has been cleared. Experts did not seem impressed with the cautious stance of the <keyword id="6360789" type="ORGANIZATION" weightage="20" keywordseo="Modi-Government">Modi government</keyword> on defence. 
 
"Good development, but not great. Round one has gone to protectionist forces. 49 per cent is the same as 26 per cent technically and hence may not open the investment floodgates," said Amber Dubey, Partner and India Head of Aerospace and Defense at global consultancy KPMG. 
 
"We hope better judgment prevails and we have the FDI limit enhanced to 74 per cent later this year," he added. Official notifications giving effect to changes will be issued soon, after the minutes of the cabinet meeting are finalised. 
 Foreign investment in defence will be though the approval route, implying it will have to be cleared by the Foreign Investment Promotion Board (FIPB). Though the 49 per cent cap will be general rule for the defence sector, 100 per cent overseas ownership will be allowed in case the <keyword id="6362476" type="ORGANIZATION" weightage="20" keywordseo="investments">investments</keyword> comes bundled with state of the art technology. Such investment proposals will have to be cleared by the Cabinet Committee on Security (CCS). 
 
In companies with a 49 per cent foreign holding, more than one Indian company will be allowed to hold the 51 per cent share, unlike the present norm that mandates that a single Indian entity should own and control the entire 51 per cent, a move that will encourage more domestic players to enter the sector. 
 
In case of Railways, 100 per cent FDI will now be allowed in railway infrastructure segments such as electrification, signalling, high speed and suburban corridors. 100 per cent FDI will also be allowed through the Special Purpose Vehicle route to provide last mile connectivity to ports and mines. Further, some railway operations have also been partially opened up to foreign investment. 
 FDI is now allowed in PPP projects, suburban corridors, high speed train systems, and dedicated freight lines. Estimates suggest that the opening of railways to foreign <keyword id="47916" type="UNKNOWN" weightage="20" keywordseo="invest">invest</keyword>ors will add 1-1.5 percentage points to the overall GDP growth. China and Japan are keen to invest in the railways sector. 
 
As a result of these changes, railways transport will be removed from the list of prohibited sectors in the consolidated FDI policy.

Indian Cabinet Approves Raising FDI Cap In Defence To 49 Per Cent, Opens Up Railways

The Prime Minister’s Office (PMO) has asked the economic ministries to come up with strategies in a bid to revive foreign <keyword id="6362476" type="ORGANIZATION" weightage="100" keywordseo="investments">investments</keyword> in the country. The new strategies should be able to change the negative global narrative about India and reposition the country as a viable investment destination. 
 Over the weekend, <keyword id="577616" type="PERSON" weightage="80" keywordseo="Nripendra-Misra">Nripendra Misra</keyword>, principal secretary in the PMO, chaired a meeting with secretaries from core economic ministries to discuss measures that would revive investment in the country. “The PMO conveyed its concerns about improving the business environment in order to revive investments and stir job creation,” an official said. 
 “There was a general brainstorming on some of the immediate steps, such as resolving conflicts between investors and the government,” he added. Although officials did not divulge any information about the specific deliberations at the meeting, it is learnt that <keyword id="44528" type="ORGANIZATION" weightage="100" keywordseo="FDI">FDI</keyword> (foreign direct investment) in defence had been discussed. 
 A proposal to amend the FDI policy in the defence sector is likely to be taken up soon as Prime Minister <keyword id="6354477" type="PERSON" weightage="80" keywordseo="Narendra-Modi">Narendra Modi</keyword> has signalled allowing more FDI than the present cap of 26% and 49% (on a case-to-case basis). “Why should we import defence equipment? We dream of an India that is self-sufficient in producing defence equipment, using the latest technology,” Modi had said at the launch of the aircraft carrier INS Vikramaditya in Goa.

PMO Asks Economic Ministries To Revive Foreign Investments

When <keyword id="44528" type="ORGANIZATION" weightage="100" keywordseo="FDI">FDI</keyword> is being actively promoted for all other sectors, why shouldn’t the Indian Military benefit from the same? Let us take a quick look at the pros and cons before the D-Day on July 10, when the newly elected Narendra Modi government will present its first Union Budget. 
 
Current scenario Even though India is the world’s largest importer of arms and has one of the biggest armed forces in place, it is mostly dependent on outdated Soviet equipment and technologies. The situation is further aggravated by a largely public sector arms industry, lacking the latest technologies for producing modern arms. It mostly makes ballistic missiles and functions as assembly lines for imported jet fighters. Worse still, the DRDO (<keyword id="32723" type="COMPANY" weightage="100" keywordseo="Defence">Defence</keyword> Research and Development Organisation) has not kept pace either with emerging and new defence technologies. The Ministry of Defence shot down the proposal for increasing FDI in defence by raising the bogeyman of security reasons and the need to protect the local arms industry. 
 
Impact on the Indian Armed Forces 
There has been a spate of fatal accidents due to outdated or defective equipment, along with problems related to spares and repairs. The most tragic incidents involved the submarine fleet. The Air Force, too, has had its share of loss of lives in air crashes. 
 
Morale of the Armed Forces – an overlooked factor 
Asking men to fight with defective and ageing equipment is like asking them to fight with one arm. It can adversely affect troop psychology and morale. 
 
Why India should modernise its weapons? 
Past cross-border wars and ongoing infiltrations from Pakistan and China make it necessary that India should be prepared and well-equipped to meet these challenges. After all, more than 50% of China’s arms exports go to Pakistan. Moreover, the ongoing Iraq crisis may move closer to home with disastrous consequences. Also, India has a coastline spanning more than 7,000 km to patrol and defend. China’s increasing presence in the Indian Ocean is another worrying factor for the defence forces of India. 
 
Western arms industry set to benefit? 
Billions of dollars are involved and there is keen competition to have a slice of the Indian arms pie. Last year, India imported $6 billion worth of arms and armaments, and this number is expected to grow. In contrast, the market for Western arms industries is shrinking and newer markets are required to support economic growth. Narendra Modi, the newly elected Prime Minister of India, has earlier made it clear that he is keen to strengthen the military and want to transform India into an arms exporter. India will be looking more towards sharing of technologies and manufacturing facilities for churning out finished products and won’t function like assembly line units. 
 
India’s Department of Industrial Policy and Promotion (DIPP) has recommended 49% FDI where no technology transfer is involved, 74% in cases of technology transfer and 100% for the manufacturing of state-of-the-art equipment. We need to wait and see how far the FDI ceiling will be raised by the new government. 
 
Western countries looking to ink deals 
Traditionally, Russia has been the top supplier of arms to India and it was the first to hold talks with the new government by sending Deputy Prime Minister, Dmitry Rogozin. However, all is not rosy for the Russian Bear. India is dissatisfied with its outdated technology and upset about the recent Russian offer to sell Mi-35 attack helicopters to its neighbour Pakistan with whom it has long-standing border and terrorism problems. 
 
France rushed its Foreign Minister Laurent Fabius to India, hoping to finalise among other deals the long-pending Dassault Aviation business for 126 Rafale jet fighters, worth over $15 billion. And the US wants to cement its very recent position as a leading supplier of arms to India. U.S. Senator John McCain from Arizona, which has arms manufacturers such as Raytheon and Boeing, expects his visit to be successful in helping the arms manufacturers in the US. He has advocated to the US Senate that it should support and augment India’s economic and military growth. The UK is also likely to depute its Foreign Secretary and Finance Minister, seeking to swing the deal away from Rafale to it Eurofighter Typhoon jets. 
 
National security 
Specific safeguards can be included in the contracts and licenses, granting India the right to take special steps during national emergencies. 
 
Wooing FDI 
A higher percentage of FDI is required as investors will invest only if they have a say in controlling their investments. Therefore, India will have to promote a stable environment with clear cut and fair economic policies. Political stability, combined with a skilled workforce, plenty of raw materials, low production costs and a profitable market will attract investors. But the bottom line is profit. 
 
FDI in the defence space with proper safeguards and well-thought-out policies will strengthen and make the Indian forces better equipped to do its duty. Apart from mutual economic benefits, FDI will also encourage and promote research and development in the defence sector in India. As India aims for greater economic presence globally, it will need matching military clout to make its presence felt.

Is FDI The Mantra For Modernising Indian Military?

<keyword id="986787" type="UNKNOWN" weightage="100" keywordseo="tatra">Tatra</keyword>, the world-famous vehicle manufacturer from Czech Republic, is all set to join hands with <keyword id="2731751" type="UNKNOWN" weightage="100" keywordseo="Reliance-Defence">Reliance Defence</keyword> to make <keyword id="1269948" type="UNKNOWN" weightage="100" keywordseo="military-trucks">military trucks</keyword> for India as well as foreign countries. This is the first major defence joint venture after the revolutionary relaxations in the FDI policy, which made it easier for foreign investors to venture into the defence manufacturing. 
 
As per the FDI norms, Reliance would have a majority stake of 51%, while Tatra would have the remaining 49%. 
 
Two weeks ago, the defence ministry received a letter about the impending JV. As per ET sources, the two companies are planning to partner for maintenance and overhaul facilities, upgrades as well as manufacturing units for the trucks in India and have signed a Memorandum of Understanding (MoU). 
 
The trucks would be manufactured at a new production unit at the Dhirubhai Ambani Defence Park, according to the 'Make in India' initiative. The companies are yet to start the process of registering the company and obtaining manufacturing licences. 
 
<a href="http://www.picturejockey.com/pblog/2012/4/images/tatra_truck.jpg">Image source</a>

Anil Ambani has got one of the world’s largest weapons-maker to partner it to create military trucks for India

The process of taking back government’s last remaining controls in the foreign direct investment (<keyword id="44528" type="ORGANIZATION" weightage="20" keywordseo="FDI">FDI</keyword>) framework has begun, which would result in the <keyword id="62529" type="ORGANIZATION" weightage="100" keywordseo="Foreign-Investment-Promotion-Board">Foreign Investment Promotion Board</keyword> (FIPB) being <a href="http://www.businessinsider.in/union-budget-2017-it-becomes-easy-to-invest-in-india-with-the-abolishment-of-fipb/articleshow/56913358.cms">taken down</a>, as announced by <keyword id="6355261" type="POSITION" weightage="20" keywordseo="Finance-minister">finance minister</keyword> <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> in his February 1 budget. 
 
The department of economic affairs (DEA) has passed a draft Cabinet note for inter-ministerial consultation regarding this matter, which also proposes the responsibility of all foreign investment in sectors that require prior approval will be given to the relevant administrative ministry, department or regulator. 
 
Also read: <a href="http://www.businessinsider.in/good-news-for-investors-new-and-simpler-fdi-reforms-are-coming-in-defence-telecom-and-broadcasting/articleshow/57444146.cms">Good news for investors! New and simpler FDI reforms are coming in defence, telecom and broadcasting</a> 
 
This would lead to faster approvals, eliminating the need for multiple clearances. 
 
Also, licensing for insurance, defence manufacturing or broadcast etc. would be a one-time thing, not requiring separate screening for individual orders. 
 
While DEA note prescribes a deadline for proposals to be received by the board and handheld before ministries take over, DIPP is in favour of handing over proposals immediately to ministries and departments. 
 
Also read: <a href="http://www.businessinsider.in/FDI-rises-53-in-last-two-years/articleshow/53451653.cms">FDI inflows have risen 53% over last two years, says Finance Minister</a> 
 DIPP is responsible for the FDI policy while DEA houses the FIPB and also administers the <keyword id="6368276" type="COMPANY" weightage="20" keywordseo="Foreign-exchange">Foreign Exchange</keyword> Management Act along with RBI. 
 
"We have now reached a stage where FIPB can be phased out," Jaitley had said in his budget speech. "We have therefore decided to abolish the FIPB in 2017-18." 
 
Over the last two years, there have been <a href="http://www.businessinsider.in/FDI-Reforms-a-tale-of-too-much-caution/articleshow/53617743.cms">several reforms</a> in the FDI policy, liberalising it so that <a href="http://www.businessinsider.in/government-to-attract-62-billion-investment-from-indian-and-foreign-companies/articleshow/57537469.cms">more and more investors</a> can be attracted to the country. 
 
(Image source: DreamGains)

Foreign Investment Promotion Board might be scrapped! FDI to be free of all govt controls

<a href="http://www.businessinsider.in/searchresult.cms?query=airbus">Airbus Group</a> said it can invest a whopping Rs 5,000 crore in India under the ‘<a href="http://www.businessinsider.in/searchresult.cms?query=make+in+india">Make in India</a>’ programmes, adding it takes two to tango. 
 Pierre de Bausset, President and Managing Director of <keyword id="6356166" type="COMPANY" weightage="20" keywordseo="Airbus">Airbus</keyword> Group India, said, “We are ready to do the same but it takes two to tango. We need the government to actually give us contract.” 
 
Meanwhile, European defence major Airbus Group also today cautioned that <a href="http://www.businessinsider.in/searchresult.cms?query=FDI+in+defence">49 per cent FDI limit in defence</a> sector cannot fetch India the industry or the right original equipment manufacturer. 
 
"..forget about 49 per cent. It is not going to get an industry and it is not going to get OEMs (original equipment manufacturer) of quality. You may get a few but not the right ones," said Pierre. 
 
Pitching for "fair business", he said that in the beginning, their Indian partners will need them a lot before they become the real champions that India has in mind. 
 
"And when they need us a lot in the beginning, I want fair business. Fair business means that we need to have levels of controls that are appropriate for the risks that we are taking. 
 "So setting the limit at 49 per cent or whatever amount is not... you have to think in terms of how do you attract us, how do you attract talent, how do you make it a good win-win partnership and not a very straight-jacket in the beginning," he said addressing reporters here ahead of the <keyword id="982460" type="UNKNOWN" weightage="20" keywordseo="Defence-expo">Defence Expo</keyword> later this month.

Airbus willing to invest Rs 5,000 crore in India, says it takes two to tango

Seems like we are on track with the <keyword id="44528" type="ORGANIZATION" weightage="100" keywordseo="FDI">FDI</keyword> structuring in India. FDI is high on the list of the new <keyword id="6360789" type="ORGANIZATION" weightage="80" keywordseo="Modi-Government">Modi government</keyword> and today the <keyword id="62529" type="ORGANIZATION" weightage="100" keywordseo="Foreign-Investment-Promotion-Board">Foreign Investment Promotion Board</keyword> (FIPB) cleared a lot of FDI proposals. This comes as good news for many foreign and Indian companies as they have been waiting to get the sign off from the <keyword id="44734" type="ORGANIZATION" weightage="60" keywordseo="Indian-Government">Indian government</keyword> for the <keyword id="6362476" type="ORGANIZATION" weightage="100" keywordseo="investments">investments</keyword>. 
 The committee was handed a list of 35 proposals in various sectors and by multiple companies, out of which FIPB gave the go ahead to 21 of them. Bharti shipyard was the lucky one to get the go from the board, whereas Sistema Shyam’s request to raise foreign holdings was denied. Others who got the right to pass is <keyword id="6393116" type="CITY" weightage="80" keywordseo="Verizon">Verizon</keyword> who got 100% FDI approved, Kineco Kaman Composites India in the defence sector and ANZ capital in <keyword id="25455" type="ORGANIZATION" weightage="60" keywordseo="finance">finance</keyword> sector. 
 This should give a boost to the <keyword id="6356076" type="UNKNOWN" weightage="60" keywordseo="indian-economy">Indian economy</keyword>, which is slowly yet steadily rising. The move will also give more confidence to foreign investors. 
 
Image: Thinkstock

Indian Government Gives The Green Signal To 21 FDI Projects,
Should Bring In More Foreign Investments

Since the launch of ‘<keyword id="6354869" type="UNKNOWN" weightage="20" keywordseo="make-in-India">Make in India</keyword>’ program, considerable thrust has been given to <keyword id="2377476" type="UNKNOWN" weightage="20" keywordseo="defence-manufacturing">defence manufacturing</keyword>. Transformation from being one of the largest importers of arms into a credible defence equipment manufacturer takes a lot. 
 
Country’s defence spending is expected to go beyond USD 600 billion by 2022 and every private company indulged into defence manufacturing wants a pie of that, especially when USD 150 billion of contracts are there to be awarded within a few years. 
 
Current scenario of Imports: 
 
 
 
 
Some of the Indian Companies in Defence Sector: 
· Mazagon Dock Ltd 
· Mishra Dhatu Nigam Ltd 
· Mahindra Defence Systems with Bae Systems &amp; Seabird Aviation (Private Player) 
· Rolta ( A Private Player) 
· Tata Advanced Systems with Boeing,Sikorsky Aircraft Corporation &amp; Israeli Aerospace Industries 
· Ashok Leyland ( Private Player) 
· Bharat Dynamics Ltd 
· Bharat Earth Movers Ltd 
· Bharat Electronics Ltd ( BEL) 
· Bharat Forge 
· Electronics Corporation of India Ltd (ECIL) 
· Garden Reach Shipbuilders &amp; Engineers Ltd 
· Goa Shipyard Ltd 
· HCL with Boeing &amp; Circore Aerospace Inc (Private Player) 
· Hindustan Aeronautics Ltd ( HAL) 
· Reliance Defence 
 
Defence Manufacturing, Exports and its future: 
 
Indian exports are negligible when it comes to the total market share on a global level. India has exported defence equipment to 22 countries over last one year, including UK, US, Israel and Russia. India exported forging equipment, electronic assemblies, flight panel controls to the US. 
 
India exported transmitting tubes to UK and MIG &amp; Sukhoi 30 aircraft spares and services to Russia. India’s major exports included Cheetal helicopters to Afghanistan, Dhruv helicopters and bulletproof jackets to Nepal, Sukhoi avionics and MIG spares to Malaysia, offshore petrol vessels and ammunition to Mauritius and Jaguar aircrafts and spares to Oman. 
 
Indian private players are looking for foreign partners as the foreign direct investment in defence sector is pushed up to 49%. Reliance defence had signed a manufacturing and maintenance deal potentially worth $6 billion with Russia's Almaz-Antey, the maker of an air defence system. Apart from the Akash air defence system, the government had cleared the purchase of five S-400 air defence systems that are estimated to cost about $4.5 billion. 
 
Similarly kalyani group tied up with Rafael of Israel to make Spike Anti-tank missiles for the Indian military. 
 
Indian private players are still far away from accessing the key sensitive technologies related to fighter aircrafts and nuclear submarines however they are approaching fast by the virtue of transfer of technology and domestic manufacturing set-up under the make in India program. What must is to invest heavily in R&amp;D facilities along with the collaboration of key government institutions like DRDO with the private partners. Incoming demands for defence equipment is heavy and it should only be fulfilled by boosting the manufacturing process along with minimum government interference and a feasible policy framework. 
 
(Image: Indiatimes)

Defence Manufacturing: Is India Inc. ready?

<keyword id="3658" type="COUNTRY" weightage="80" keywordseo="India">India</keyword> is planning to ensure eligibility is simplified foreign defence equipment manufacturers to invest up to 100% in Indian ventures as part of the big-ticket reform package to be rolled out before the winter session of Parliament. 
 At present, India allows up to 49% foreign direct investment in the <keyword id="6412360" type="UNKNOWN" weightage="80" keywordseo="Defence-Sector">defence sector</keyword> and up to 100% <keyword id="44528" type="ORGANIZATION" weightage="80" keywordseo="FDI">FDI</keyword> is allowed in projects involving state of the art technology, to be approved by the Cabinet Committee on Security on a case to case basis. 
 
The government has begun discussions to bring clarity on what 'state of the art' implies so as to expand the basket of products to become eligible for higher foreign investment and reduce the country's reliance on imports, a top government official said. "We are looking at simplifying the overall framework," the official told ET. 
 
"A number of sectoral conditions do not mean much and create unnecessary deterrent." Another government official said that there are a host of conditions specified in FDI policy that even cover appointment of chief security officer. The government plans to streamline and simplify these conditions, particularly for dual use products. 
 
The proposal is expected to be finalised shortly, the second official said The Narendra Modi-led government considers defence production as one of the focus areas to ramp up the country's manufacturing sector, which is slowly moving back towards recovery. 
 
Image credit: Indiatimes

You Searched For "FDI defence" and got 15 results

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