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FM hikes FDI limits in defence manufacturing; ban on certain imports of weapons

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New Delhi, May 16: Finance Minister Nirmala Sitharaman on Saturday announced that FDI limit in defence manufacturing under automatic route to be raised from 49 per cent to 74 per cent.

Nirmala Sitharaman

She made the announcement at a press briefing to list fourth trancheof economic package that focuses on eight sectors, including coal, minerals, defence production, airspace managements/airports/MRO, power distribution companies in UTs, the space sector and atomic energy.

The higher foreign direct investment (FDI) limit on defence manufacturing is under the automatic route, for which government approval is not required, Sitharaman said.

"We will notify a list of weapons and platforms for ban on their imports and fix deadlines to do it," Sitharaman said, adding this move will improve self-reliance on defence manufacturing.

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.

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Self-reliance in Defence Production

  • Notify a list of weapons/platforms for ban on import with year wise timeline
  • Indigenisation of imported spares
  • Separate budget provisioning for domestic capital procurement to reduce huge defence import bill
  • Improve autonomy, accountability and efficiency in ordnance supplies by corporatisation of ordnance factory board
  • FDI limit raised from 49 per cent to 74 per cent
  • Time-bound defence procurement process and faster decision making will be ushered in

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