Centre of Excellence in Defence Sector

Funds for Defence Sector

Even as Prime Minister Narendra Modi-led NDA government aggressively pushed for ‘Make in India’ in the defence sector in 2015, it failed to attract Foreign Direct Investment (FDI) in the sector with a paltry amount of Rs 56 lakh coming in since last year when norms were first eased by it.

Latest data shared by Minister of State for Defence Rao Inderjit Singh in parliament shows that in the period between October 2014 – September 2015,
the FDI equity inflow into Defence Industries is a just Rs 56 lakh, at the bottom of the list of sectors that received foreign money.

This lackluster response of foreign investors is also the likely reason for another set of big changes that the government announced 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 per cent through automatic route.

The government has also made amendments to offsets policy by allowing “flexibility to the vendors in offset contracts.”

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