FDI IN DEFENCE

SUBMITTED BY:
SOMIT RANJAN DAS
TANUSHREE SAHA
AESHA BRAHMBHATT
CHANDRA PRAKASH MAURYA
AVINASH KUMAR SWAIN
MITALI BARMAN
BITOPAN NATH
RUPAM DAS
DIVYA KHUNT
REETESH AGARWAL
CONTENTS
•WHAT IS FDI?
•HISTORY OF FDI
•FDI IN DEFENCE
•ROUTES FOR TAKING
PERMISSION OF FDI IN INDIA
•RECENT POLICIES
•WHY COUNTRY SEEK FDI
• DEMERITS OF FDI IN DEFENCE
• CONCLUSION
What is FDI?
Foreign direct investment (FDI) is a direct
investment into production or business in a
country by an individual or company in another
country, either by buying a company in the
target country or by expanding operations of an
existing business in that country.
 HISTORY OF FDI
At the time of independence, the
attitude towards foreign capital was one of fear and
suspicion.
The suspicion and hostility found expression in the
Industrial Policy of 1948 which, though recognizing the role
of private foreign investment in the country, emphasized
that its regulation was necessary in the national interest.
Because of this attitude expressed in the 1948 resolution,
foreign capitalists got dissatisfied and as a result, the flow of
imports of capital goods got obstructed. As a result, the
prime minister had to give CERTAIN assurances to the
foreign capitalists in 1949.

Foreign investment was introduced in 1991 under foreign

exchange management act (FEMA), driven by then finance
WHY COUNTRY SEEKS FDI?
• Domestic capital is inadequate for purpose of
economic growth;
• Foreign capital is usually essential, at least as
a temporary measure, during the period when
the capital market is in the process of
development;
• Foreign capital usually brings it with other
scarce productive factors like technical know
how, business expertise and knowledge.
 FDI IN DEFENCE
Only Defence Manufacturing Coupled With
Economy Might, Can Make India is Supreme Power.

The government has announced FDI cap in defence

at 26 per cent, even while stating that higher foreign
investment in ‘state-of-the-art’ technology
manufacturing will be considered by the Cabinet
Committee on Security (CCS) on a case-to-case basis.
ROUTES FOR FDI

• AUTOMATIC ROUTE

• GOVERNMENT ROUTE
 AUTHORITIES DEALING WITH FDI
• Approval from R.B.I
• Permission from FIPB
• Permission from SIA
• Permission from FIIA
• Investment
Commission
• Project Approval Board
 RECENT POLICIES:
FDI in defence sector was first started in 2001. As
per the rules and regulations prevailing then, the
Fdi cap was set as 26%.

. The prevailing cap on FDI was suggested to be

47% by some experts but ultimately, it stood at
26% as per a 2001 policy.
. As per current provisions, the foreign supplier is
obliged to offset 30% of the contract value, or 50%
in very large projects such as the MMRCA fighter
contract, through domestic sub-contracts.
For example- the Boeing company;
It is an American multinational aerospace and defense
corporation. Founded in 1916 by William E. Boeing in
Seattle, Washington.
The close relationship between Boeing and India goes
back some 70 years, when Tata Airlines first flew DC-3
aircraft. India then entered the jet age on the wings of
Boeing commercial jetliners, and Boeing jets continue
to be the mainstay of the country’s domestic and
intercontinental commercial fleets.
Today, Boeing also partners with India to meet the
country’s aerospace and defense requirements.

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Boeing Defense, Space & Security
On January 1, 2009, the government of India purchased
eight Boeing P-8I long-range maritime reconnaissance and
antisubmarine aircraft. The P-8I is an India-unique variant
of the U.S. Navy’s P-8A Poseidon. In June 2011, India’s
Ministry of Defence signed an agreement with the U.S.
government to acquire 10 Boeing C-17 Globemaster III
airlifters. The C-17 is the largest defense contract signed by
the Indian government with the United States Recently.
Boeing has submitted a $300-million plan for investment
in the Indian defence industry as "offsets" for the four
additional P8I long-range maritime patrol aircraft that
India intends to buy for its navy, a senior company official
has indicated.
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MERITS OF FDI IN DEFENCE
• INFLOW OF EQUIPMENT AND NEW
TECHNOLOGY.
• COMPETETIVE ADVANTAGE AND
INNOVATION.
 DEMERITS OF FDI IN DEFENCE:
 
•The private sector has not been able to harness
its strengths for the defence sector.
•The present 26% ceiling on FDI limits the
economic incentive to the foreign investor
•The economic incentives and the profitability
are the key determinator for the foreign
investors.
CONCLUSION
Goal must be to develop indigenous
technologies and to reduce reliance on
imports.
THANK YOU
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08/23/14