FM pushes Make in India, hikes defence FDI

Separate budget provision to buy ‘Made in India’ products: Sitharaman

To give a push to Make-inIndia in the defence sector, finance minister Nirmala Sitharaman on Saturday announced a slew of measures including hiking FDI in defence manufacturing to 74 per cent from 49 per cent under automatic route which will encourage major foreign defence companies to set up factories in the country.

Finance minister said that there will be now a separate budget provisioning to buy only “Made in India” defence products.

Government will also come out with a negative list of weapons (with year wise timelines) which cannot be imported from foreign countries to cut India’s defence import bill. The department of military affairs led by the Chief of Defence Staff (CDS) Gen Bipin Rawat will come out with the negative list of weapons with their timelines. However, critical weapons needed for the defence which are not locally produced will still be imported.

India is one of the world’s second largest arms importer despite a push for Make-in-India by the Modi government. In 2014, Modi government had hiked FDI in defence manufacturing from 26 per cent to 49 per cent.

Finance minister said that there will be emphasis on indigenisation of imported spares for foreign weapons used by the defence forces. She said that there will be time bound defence procurement process and faster decision making as there will be realistic setting up of General Staff Qualitative Requirements (GSQRs) of weapons and platforms. There will be overhauling of trial and testing procedures.

To improve the efficiency in ordnance supplies, Sitharaman said that there will be corporatisation of the Ordnance Factory Board (OFB). “The move to corporatise ordinance factories board will bring in the rigours of corporate laws and business efficiency into defence manufacturing,” said Elias George, partner, KPMG India.

He said that overall finance minister’s announcement serves the two cardinal purposes of enabling foreign investment in defence production while also ensuring greater self-reliance in this sector.

◗ INDIA IS one of the world’s second largest arms importer despite a push for Make-in-India by the Modi government. In 2014. The Modi government had hiked FDI in defence manufacturing from 26 per cent to 49 per cent.