74% FDI in defence | Notification soon, says Department of Defence Production official

The government is going to come out with a decision on 74% Foreign Direct Investment (FDI) in defence and a notification is likely in the next few days, according to V.L. Kantha Rao, Additional Secretary, Department of Defence Production.

It's 100% FDI in most sectors, including defence

Separately, the Defence Ministry said the second draft of the Defence Procurement Procedure (DPP) 2020, now renamed as the Defence Acquisition Procedure (DAP) 2020, was put out in public domain on Tuesday for comments from stakeholders and public.

On the target to indigenise spares and sub-assemblies of imported military hardware, Mr. Rao said, “We will try and do at least 900 items this year and we have a target of 5,000 items in five years.”

He was speaking at the Lockheed Martin - Society of Indian Defence Manufacturers suppliers conference.

Government nod mandatory for FDI from neighbouring countries

In May, the government announced a series of measures to promote domestic defence manufacturing. These include a negative import list, separate budgetary allocation for domestic procurements, indigenisation of spares and components and raising the FDI cap through automatic route from 49% to 74%.

Taking of the indigenous defence manufacturing space, Mr. Rao said, Indian manufacturers did exceedingly well when it came to exports. “Government companies did $100mn exports last year; the private sector 10 times, over a $1 billion, last year,” he said. However, when it came to overall defence manufacturing, the major share was with the public sector, which accounted for about $8bn. The private sector did around $2bn.

Rising private role

The increase in exports by the private sector comes as several major defence companies like Lockheed Martin, Boeing, Thales and Dassault Aviation are increasingly sourcing components from India for their global supply chains. For instance, all C-130 transport aircraft manufactured by Lockheed Martin have components sourced from their joint venture with Tata group in Hyderabad.

Also read | New FDI rules may have unintended effects | India invites greater participation from Israeli defence companies

On the DAP 2020, the Defence Ministry said in a statement that for the first draft of DPP 2020, suggestions were received from various stakeholders, Services, industry running into more than 10,000 pages.

“The amended second draft has since been finalised by the review committee driven by tenets of defence reforms announced as part of the ‘Atmanirbhar Bharat Abhiyan’ and has been placed in the public domain,” it stated. Comments on the amended draft should be sent latest by August 10.

Printable version | Apr 22, 2021 2:39:17 AM |

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