FILE PHOTO – India’s Finance Minister Nirmala Sitharaman arrives to present the 2019 budget in Parliament, New Delhi, India July 5, 2019. REUTERS/Adnan Abidi
May 16, 2020
NEW DELHI (Reuters) – India will ease restrictions on the level of foreign ownership in defence manufacturing, Finance Minister Nirmala Sitharaman said on Saturday, in a move aimed at cutting down on imports.
Under the plan, foreign investors would be able to own a stake of up to 74% in defence manufacturing ventures, up from the 49% limit now, Sitharaman told a news conference.
The increase in foreign investments would help reduce a “huge defence import bill” and make India self-reliant in defence production, she said, adding India would also expand the list of weapons that could not be imported.
The move would give a major “incentive to foreign defence manufacturers who want to retain control” in the joint ventures, said Atul Pandey, a partner at India law firm Khaitan & Co, that advises defence firms.
He said major defence manufacturers, such as Lockheed Martin Corp. <LMT.N>, Boeing <BA.N>, MBDA, Raytheon <RTX.N> and Dassault <DAST.PA>, which all have joint ventures in India, could expand their investments, he said.
The government, facing a big drop in revenue collections amid the coronavirus crisis, has faced calls from policymakers to cuts in spending, including defence imports.
In February, the finance minister allocated 4.71 trillion rupees ($62.1 billion) for defence in the annual budget for 2020/21, including about 1 trillion rupees for capital spending.
Between 2013 and 2017, India was the world’s top arms importer, accounting for 12% of total imports globally, with Russia, Israel and the United States among the top suppliers.
Prime Minister Narendra Modi earlier this year set up a target to double defence exports in next five years, from about $2.4 billion a year now.
($1 = 75.8170 Indian rupees)
(Reporting by Aftab Ahmed and Manoj Kumar; Editing by Alasdair Pal and Edmund Blair)
