Confusion Remains On FDI Limits
By VIVEK RAGHUVANSHI
NEW DELHI — India has made major changes in its defense production policy that will enable foreign manufacturers to set up production in India without going through the cumbersome process of seeking licensing.
Under the changed policy, several defense products will no longer require licensing from the Defence Ministry. Only procedural approvals to set up any ordinary industrial unit will now be required for these products. Obtaining licenses for products is a cumbersome process involving security clearances.
The Department of Industrial Policy and Promotion (DIPP) announced on June 26 that it had removed several defense items from the compulsory license list, but it is not clear how many. The list of defense products that will require licensing has been reduced to only four sections.
The move to de-license several defense items is the first major move by the new Narendra Modi government to help boost the domestic defense production base, as more production units will be set up. However, there is lack of clarity among domestic firms and analysts over whether the new notification will allow 100 percent foreign direct investment (FDI) by overseas firms to produce the select list of defense products for which license is no longer required.
MoD officials declined to answer questions that would clarify the ambiguity.
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