Nirmala Sitharaman hikes FDI limit in defence production from 49 pct to 74 pct

In a very big move announced by FM Nirmala Sitharaman today announced the government's decision to raise the foreign direct investment (FDI) limit under the automatic route from existing 49 per cent to 74 per cent in the defence production. She said that the decision was an important one as it would make an 'Aatmnirbhar Bharat' in the field of defense. FM made this announcement while presenting the fourth tranche of Rs 20 lakh crore stimulus package first revealed by Prime Minister Narendra Modi. Teh intention behind this move was to boost Make in India in defence production. 

At her press conference in New Delhi today, FM Sitharaman said, "The Government of India under the leadership of Prime Minister Narendra Modi has decided that FDI limit in the defence manufacturing under automatic route will be raised from 49 per cent to 74 per cent." She also announced the time-bound defence procurement process that will usher faster decision making in the sector.

Defence Minister Rajnath Singh in his reaction to FM Nirmala Sitharaman's announcements, said, "FDI limit in defence manufacturing under automatic route has now been raised from 49% to 74%. This will unleash true potential of Indian defence production capabilities through ‘Make in India’. Announcements made today will prove to be game-changer."

He added, "Today’s announcements by Centre will go a long way in unshackling economy in many ways. Corporatization of Ordnance Factory Board (OFB) has been topmost priority of Govt. Corporatization will improve efficiency of our Ordnance supplies & factories."

See Zee Business Live TV streaming below:

To support contract management in the defence procurement Sitharaman said, "The Government of India is going to set up Project Management Unit to support contract management. She also announced the realistic setting of general staff qualitative acquirement of weapons or platforms. Sitharaman also said that GoI is going to overhaul trial and testing procedures in the defence procurement system.

FM also said that some weapons and platforms will be banned for imports. Items banned for imports can only be purchased from within the country, she said presenting the fourth tranche of the economic stimulus package.

Also, there will be indigenisation of some imported spares, she said adding separate budget provisioning for domestic capital procurement will be done.

This, she said, will reduce the huge defence import bill.

Ordnance Factory Boards will be corporatised for better management and eventually get listed on the stock market, she said adding corporatisation is not privatisation.

For the time-bound defence procurement process and faster decision-making, project management unit (PMU) to support contract management will be set up.