Changes needed to attract defence sector investment

By Alina Arora and Parth Singh, Luthra & Luthra Law Offices
0
2975
LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link

The current consolidated foreign direct investment (FDI) policy, as amended by the Department of Industrial Policy and Promotion via Press Note 5 of 24 June 2016, allows for FDI in the defence sector up to 49% under the automatic route and up to 100% with government approval. Startlingly, despite the government’s efforts to boost FDI through the Make in India initiative, the defence sector attracted only about US$1 million in FDI equity inflow between April 2013 and December 2016, as reported by the Press Information Bureau.

Alina Arora Partner Luthra & Luthra Law Offices
Alina Arora
Partner
Luthra & Luthra Law Offices

The government increased the FDI threshold for the automatic approval route from 26% to 49% in 2014 and subsequently continued to revise conditions under which a 100% FDI proposal would be approved in the defence sector. The government also rolled out the Defence Procurement Procedure – 2016 (DPP-2016), to boost the Make in India initiative in the defence sector and expedite the procurement process. Industry observers have welcomed DPP-2016, which borrows extensively from the report of a committee chaired by Dhirendra Singh, commissioned by the government to recommend changes to the previous defence procurement procedure.

While these attempts are laudable and reflect a clear intent on the part of the government to promote FDI in the defence sector, the definitions of “Indian vendor” and “modern technology” have led to uncertainty and require urgent redress.

You must be a subscribersubscribersubscribersubscriber to read this content, please subscribesubscribesubscribesubscribe today.

For group subscribers, please click here to access.
Interested in group subscription? Please contact us.

你需要登录去解锁本文内容。欢迎注册账号。如果想阅读月刊所有文章,欢迎成为我们的订阅会员成为我们的订阅会员

已有集团订阅,可点击此处继续浏览。
如对集团订阅感兴趣,请联络我们

Alina Arora is a partner and Parth Singh is an associate at Luthra & Luthra Law Offices. The views expressed here are personal. They are intended for general information purposes and are not a substitute for legal advice.

luthra & Luthra

9th Floor, Ashoka Estate

Barakhamba Road

New Delhi – 110 001

India

Contact details:

Tel: +91 11 4121 5100

Fax: +91 11 2372 3909

Email: delhi@luthra.com

Website: www.luthra.com

LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link