FDI in defence: A growth driver for the industry
Kishore Jayaraman, President, Rolls-Royce, India and South Asia
The Indian defence industry, which has grown substantially in the recent years, is poised for even better days. Today, India ranks among the top 10 countries in the world in terms of military expenditure yet imports 70 per cent of defence equipment. For India to successfully continue with its massive acquisition programme of the latest and best equipment in a sustainable way, it has to actively look into indigenisation.
The government’s clear vision for building an indigenous defence industry will help boost manufacturing and attract funds to build the country’s infrastructure. The foreign direct investment (FDI) hike in defence is intended to cut imports by indigenising defence production. It will also help create jobs and also encourage collaboration between foreign defence equipment manufacturers to get into co-development and co-production arrangements with Indian companies.
Defence technology comes with huge investments in research and development (R&D). Constant improvements are taking place in this sector and better technologies are being developed around the globe. With increased FDI limit India can now focus on increasing its share of defence budget to R&D which is only 6 per cent compared to 15 per cent in France and 12 per cent in the US. At RollsRoyce, we put great emphasis on technology and this is evident from the fact that over the past 10 years, Rolls-Royce has invested £7.9 billion in R&D. Our investment in R&D has grown in the past decade, with two-thirds aimed at improving the environmental performance of our products.
Leveraging Strong Partnerships
UK has played a pivotal role in India’s defence modernisation and share a strong history of mutual cooperation. India is one of the fastest growing economies in the world and is a powerhouse of technology. There are several agreements in the area of encouraging defence industrial partnerships, for example, setting up of Defence
Continued on facing page 13...