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TOPIC -6

Foreign Direct Investment in Defense

Quick points to remember:

• There is a debate about allowing foreign direct investments in defence
sector in India.
• This decision may seem a major move in favour of the concept Make in
India.
• The government denied the proposals of restricting foreign direct
investments into defence sector to 49 percent in 2016.
• This does not mean that the government has provided relaxation for the
restriction of 49 percent of FDI in “state of the art “technology. FDIs above
49 percent in defence sector still need government approval.
• The decision made by the government does not assure automatic
approval of FDIs below 49 percent in the defence sector as well.
• The approval for 100 percent FDI in the defence sector is to promote
“Make in India” initiative in the defence sector.
• The major corporate companies opposed the decision of the government’s
decision to approve 100 percent FDI in the defence sector.
• The argument of the major corporate companies behind their stand is that
the Indian companies should hold above the 49 percent stake along with
the global defence companies while undertaking an Indian project with an
intention to promote Indian expertise.
• The government of India ruled out these arguments saying the 100 percent
FDIs will be permitted to promote the participation of global defence
companies to invest in Indian defence projects.

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