Norms for defence sector companies eased

The government on Monday allowed private companies in the defence sector to sell equipment to state-run entities without prior approval of the defence ministry, a move that could attract investments in the sector. The decision came after the government opened the sector  for  higher foreign direct  investments  (FDI) and relaxed compulsory licensing for a number of equipment.

“The licencee shall be allowed to sell defence items to government entities under the control of ministry of home affairs, state governments, public sector units and other valid defence licensed companies without prior approval of the Department of Defence Production (DoDP),” said a commerce and industry ministry statement.

However, it said, for sale of the items to any other entity, the licencee shall take prior permission from DoDP. The government also decided to deregulate the annual capacity for production of defence items by industrial licencees with the condition that licencees shall submit half-yearly production returns to the Department of Industrial Policy and Promotion and DoDP.

Further, it said as a measure of ease of doing business, two extensions of two years each in the initial validity of three years of the industrial license would be allowed up to seven years.

Earlier, the government  had raised  FDI cap in the defence sector  to 49 per cent from existing 26 per cent and allowed even beyond that limit on a case-to-case basis if results in infusion of state- of-art technology.