FDI in de­fence: A growth driver for the in­dus­try

Kishore Ja­yara­man, Pres­i­dent, Rolls-Royce, In­dia and South Asia


Rapid In­di­geni­sa­tion

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...

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