Defence is one of the most important sectors in India strategically. We have a military strength of over a million and import more than 70% of our military armaments. The government of India has allowed 100% FDI out of which 49% is through automatic route; which allows for FDI without government approval.
There were a lot of questions regarding the national security for 100% FDI but the government has backed itself saying it does not compromise national security but brings greater investment and more employment.
India's focus on defence manufacturing is paying off high dividends as it unveiled HAL manufactured Tejas light combat Aircraft and Thermobaric ammunition for Arjun tanks. While India signed a 58,000 crore deals with Russia for 36 Rafale fighters, the manufacturer was ready to manufacture the planes in India if ordered a bigger consignment. Brahmos missile, a joint venture between Russia's NPO and India's DRDO, has been in talks of exporting it to the Latin America and South East Asia.
India's defence exports almost doubled during the financial year 2015-2016 and manufactured equipments worth Rs 2,059 crore were exported to 28 countries. Foreign companies manufacturing goods in India have to pass the technology to Indian companies for their native production. Foreign companies need not mention their tie up with Indian counterparts at the time of bidding and 51% Indian equity ownership has been removed.
Indian private companies like Reliance Defence Anil Ambani Group(RDEC), Reliance Industries, Larsen& Toubro and Mahindra have stepped up to manufacture defence armaments.
Pushing forward on its Rs 6,000-crore deal for military helicopters, Russia has informed the Ministry of Defence about an association with Reliance Defense to manufacture Kamov 226T choppers indigenously.
While an option to partner with defence public sector unit Hindustan Aeronautics Limited (HAL) has also been kept open for the final approval from the Indian government, sources said the Russian side has shown interest to work on a joint venture with under another element that could be named 'Reliance Helicopters'
BW Reporters
The author is a correspondent with BW Businessworld with keen interest in HR and employee welfare.
