FDI in Defence Sector
In May 2001, the Defence Industry sector, which was hitherto reserved for the public sector, was opened up to 100% for Indian private sector participation with FDI permissible up to 26%, both subject to licensing. Vide Press Note No.7 (2014 Series), Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry has raised the FDI limit in Defence Sector up to 49% through FIPB route and above 49% through Cabinet Committee on Security (CCS) on case-to-case basis, wherever it is likely to result in access to modern and state-of-the-art technology in the country. FDI limit of 49% is composite and includes all point of foreign investments i.e. Foreign Direct Investment (FDI), Foreign Institutional Investors (FII), Foreign Portfolio Investment (FPI), Non Resident Investments (NRIs), Foreign Venture Capital Investor (FVCI) and Qualified Foreign Investors (QFI).
FDI policy in the Defence Sector is applicable to Defence Industries, subject to Industrial Licensing under the Industries (Development and Regulation) Act, 1951. The list of defence products requiring industrial license has been notified vide Department of Industrial Policy & Promotion (DIPP) Press Note-3 (2014 Series) dated 26th June, 2014.
The Defence Production Policy, 2011 aims at achieving substantive self-reliance in the design, development and production of equipment / weapon systems / platforms required for defence in as early a time frame as possible; creating conditions conducive for the private industry to take an active role in this endeavour; enhancing potential of SMEs in indigenisation and broadening the defence R&D base of the country. The policy also highlights the need to build up a robust indigenous defence industrial base by pro-actively encouraging larger involvement of Indian private sector, design, development and manufacture of defence equipment.
This information was given by Defence Minister Shri Manohar Parrikar in a written reply to Shri P Bhattacharya and Shri Husain Dalwai in Rajya Sabha today.
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