Foreign Direct Investment (FDI)

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  • Increase in FDI Cap Alone Not Enough for Defence Sector

    Raising the FDI limit by itself may not enthuse the foreign investors as per the expectations. To make the defence sector more attractive for foreign investment, a whole lot of other related issues will have to be addressed by the government.

    September 14, 2020

    FDI in Defence: Need for Liberalisation and Simplification

    The government should set up a task force to engage with potential investors and investees and evolve a simplified FDI policy, which has different slabs for different kinds of activities and is free from terms and conditions that are difficult to understand and implement.

    May 04, 2017

    Making FDI Count in Defence

    Making FDI Count in Defence

    It is rare that a foreign company makes a huge investment to produce major platforms in a third country with a view to make that country an export hub.

    June 22, 2016

    Durga Prakash asked: There are media reports suggesting that India uses antiquated weapons. Is that true or India has the required advanced weapon system? Also, whether 49 per cent FDI in defence is enough to ensure India’s security preparedness?

    Vivek Chadha replies: There is no force in the world which can claim to have its entire range of weapon systems at the cutting edge level. Normally, depending upon the threat perception of a country and the capability it chooses to develop, a policy is formulated which lays down the mix of weapon systems that is required to be maintained.

    India’s Revised Defence FDI Policy

    India’s Revised Defence FDI Policy

    Under the earlier policy, the foreign portfolio investment in Indian defence industry was either banned, or capped at an arbitrary level for certain companies, causing a lot of dissatisfaction among several listed Indian companies which had pleaded their genuine helplessness in controlling such investments given their nature of flow.

    September 01, 2014

    FDI in Defence - Revisiting the Conundrum

    The proposal to relax the present cap on FDI in defence has expectedly drawn sharp reactions. Those who oppose argue that higher FDI is not required and, more importantly, it will not be in national interest, not the least because it will stymie the process of indigenization. This calls for a dispassionate analysis.

    June 26, 2014

    Foreign Direct Investment Policy 2014: Status Quo for the Defence Sector

    One of the provisions in the policy is that in the Information & Broadcasting and the Defence sectors, where the sectoral cap is less than 49 per cent, the company would need to be ‘owned and controlled’ by resident Indian citizens and Indian companies, which, in turn, are owned and controlled by resident Indian citizens. This is a virtual impossibility.

    April 23, 2014

    FDI in Defence: Making the Most of the Status Quo

    The MoD is possibly of the view that allowing foreign companies to set up manufacturing and assembling facilities in India will stymie the growth of indigenous design and development activities.

    July 16, 2013

    Saideswara Rao Gadde asked: What are the problems in allowing FDI in Indian defence sector?

    Reply: Refer to an earlier reply to a similar query, at http://idsa.in/askanexpert/privateinvestmentsindefencesector

    Also, refer to following publications:

    Sandeep Verma, “A Level-Playing Field that Isn’t: How India’s Defence Offset Procedures Could Discriminate against Indian Bidders”, January 15, 2013, at http://idsa.in/idsacomments/DefenceOffsetProceduresCould_SandeepVerma_150113

    S.N. Misra, “Impact of Offset Policy on India’s Military Industrial Capability, Journal of Defence Studies, 5 (3), July-December 2011, at
    http://idsa.in/jds/5_3_2011_ImpactofOffsetPolicyonIndiaMilitaryIndustrialCapability_SNMisra

    Laxman K. Behera, “A Case for Increasing FDI up to 100 per cent in India’s Defence Industry”, Issue Brief, August 9, 2011, at

    http://idsa.in/policybrief/ACaseforIncreasingFDIupto100percentinIndiasDefenceIndustry

    FDI in Defence: Lessons for Developing Countries

    Most developed economies are already feeling threatened by increasing equity investments sponsored by foreign government-owned and/ or foreign government-controlled entities in the defence and high-tech industries. A coordinated government response for supervision of foreign investments will emerge on the horizon sooner than later.

    May 07, 2013

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