1. FDI in Defence
Sector

2. Index
Introduction
FDI
Need for FDI
Challenges regarding FDI in Defence
International Joint-Ventures
Problems in Permitting Higher FDI
Importance of FDI in Defence

3. Introduction
• FDI is a direct investment into production or
business in a country by a company in another
country, either by buying a company in the
target country or by expanding operations of an
existing business in that country.
• Defence sector is will be highly affected by FDI
from several companies like BAE systems ,
DCNS , EADS etc.

4. FDI
• India currently has only 26% of FDI in
defence industry but it will increase as said
by MoCI
• India currently procures approx 70% of its
equipments from abroad, but the
government aims to reverse it.
• It enhances job opportunities , proper
payments , more export and better
economic stature.

5. Need For FDI
• Defence sector is sector where huge
capital is required for production as
well as R&D.
• Technology is something which has an
evitable and continuous changes.
• FDI will bring latest technology

6. Challenges Regarding FDI in
Defence
• Private sector still hasn’t got that catch hold
over defence sector
• Only 26% investment ceiling is not that
profitable for investors
• Resistive nature of MoD
• Higher proposed raise in FDI by MoCI

7. International Joint Ventures
• L&T and EADS JV for building defence systems for
electronic warfare
• Rolta India renews partnership with Intergraph Corp in
defence security
• Three joint ventures by different Tata companies with
foreign majors
• European naval systems major DCNS announces Indian
venture
• Vectra Group forms JV with Russian truck maker Kamaz

8. Problems in Permitting Higher FDI
• The primary concern is that allowing greater
FDI will reduce India’s ‘control’ over a security
sensitive sector.
• Raising the ceiling from 26% to 49%, makes no
fundamental difference to the control
majority Indian partner holding 51% .

9. • Less development of indigenous Defence
Industries
• Indirect economic control of companies over
FDI in Indian Industries

10. Importance of FDI in
Defence
• Higher stake allows the foreigner greater
incentive to bring in latest technology to India
• Significant development in quality and
quantity of defence equipments
• Proper growth in Economic sector
• Meets the need of armed forces
• Defence industry’s skill will be enhanced

11. My Views
• 49% FDI should be permitted as foreign
industries also may attracted for investment in
India.
• It will empower the military power of India on
global level
• International ventures helps us in making
friendly relations
• Less expenditure on Military exports