UNITED24 - Make a charitable donation in support of Ukraine!

Weapons of Mass Destruction (WMD)

India Notches $1 Million FDI in Defense Sector Since 2013

Sputnik News

16:33 25.03.2017(updated 17:12 25.03.2017)

New Delhi's aggressive efforts to raise foreign direct investment haven't borne fruit, despite the push for Make In India scheme, a pet favorite of Prime Minister Narendra Modi.

New Delhi (Sputnik) – Most of the foreign direct investment (FDI) has come from countries like the United Kingdom, France and Israel. The Indian government had revised the FDI policy last year under which FDI up to 49% is allowed through automatic route and beyond 49% under government approval route, wherever it is likely to result in access to modern technology or for other beneficial reasons.

"During the last three years and the current financial year, 34 FDI proposals were received for consideration of the Foreign Investment Promotion Board (FIPB), out of which, 17 have been approved. The FDI equity inflow for April 2013-December 2016 in defense sector is $ 1 million," said a statement from the Ministry of Defense.

Over the last three years, the government has been grappling with foreign investment and technology transfer to boost domestic manufacturing and create jobs for the unemployed. India's defense ministry has asked countries like Russia and the US to manufacture defense equipment in India through joint venture and technology transfer.

Experts said India should focus on developing its own technology by investing more in research and development.

"FDI in defense deals involves high-end technology and therefore, technology transfer to a third party is jealously controlled by governments, not by companies per se. Even if a foreign government were to decide to transfer a technology for the purpose of manufacture to another country, such a transfer is often linked to a hefty sum of returns. 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," said Laxman Kumar Behra, research fellow at Delhi-based think tank Institute for Defence Studies and Analyses.

Indian private industries are eagerly waiting for the much-delayed strategic partnership policy, which will provide opportunities to foreign manufacturers to choose partners in India to divest offset liability in defense deals. Indian defense industry expect $35 billion defense projects once the strategic partnership policy comes into force.


Join the GlobalSecurity.org mailing list