FDI POLICY. Defence sector set for further relaxation in FDI regulations

The Centre is expected to further relax FDI norms for the defence sector, even as it will come out with a clarification on some provisions that were announced on Monday.

Post the Monsoon Session of Parliament, the Centre is expected to unveil another set of FDI reforms, which will see further easing of norms for the defence sector, in an effort to attract foreign investments as well as world-class technology, sources told BusinessLine .

On Monday, the Centre amended FDI norms for the defence sector in a bid to make it easier for foreign military equipment manufacturers to set up shop in India, resulting in critical technology transfer.

Compared to the previous policy, the amended version stipulates that up to 100 per cent FDI will be allowed in the sector, provided it results in “access to modern technology” instead of “state-of-art technology”. However, according to sources, the industry has already started pointing fingers at what the phrase ‘modern technology’ entails, urging the Centre to define it explicitly.

Post the Monsoon Session, the Centre might even do away with the phrase, thereby throwing open the sector in an effort to boost the government’s flagship ‘Make in India’ campaign.

Nevertheless, sources said, certain conditions will remain pertaining to the proper scrutiny of such proposals that will bring in 100 per cent FDI by the Cabinet Committee on Security (CCS).

According to US-based defence giant Lockheed Martin, it is “pursuing opportunities to expand” its presence in India.

“We are reviewing the changes in rules. We are pursuing opportunities to expand our partnership with New Delhi, which spans more than 20 years and includes a strong emphasis on the ‘Make in India’ approach,” Phil Shaw, CEO of Lockheed Martin India, told BusinessLine .

The company has expressed its intention to manufacture the F-16 fighter jets in India.

Nitin Seth, President (LCV & Defence), Ashok Leyland, said: “It may not be possible for us to afford state-of-art technology, while we will get latest and modern technology.”