'Revised Defence Acquisition Policy to address bottlenecks'

Defence and aerospace sectors will provide $ 80 bn opportunity for Indian manufacturing sector in the next 8 yrs

NITI Ayog member V K Saraswat today said some of the issues coming in way of attracting foreign direct investment (FDI) in large scale into the country's defence and aerospace sectors were likely to be addressed in the revised Defence Acquisition Policy that would be released in a few weeks from now.

Saraswat said apart from the issue of FDI limit, the cost of doing business has been a disabling factor in bringing investments into defence and aerospace sectors, which would provide $ 80 billion opportunity for the Indian manufacturing sector in the next 8 years.

While the foreign players have welcomed the enhancement of FDI limit to 49% from the earlier 26% in defence sector, they are asking for 50% and even more to have a full control over the joint ventures involving high tech manufacturing and technology transfer.

While investments have started happening in area of manufacturing of aero structures such as Mahindra's upcoming plant in Bangalore and the C290 aircraft assembly facility to be set up by the Tata Advanced Systems in collaboration with the Airbus, government needs to do more to fully utilise this opportunity, according to him.

Changes in tax structure and other initiatives would also create favorable environment for the growth of aircraft maintenance, repair and overhaul (MRO) business, which is expected to $ 2.6 billion by 2020, he said on the sidelines of the second edition of Defence and Aerosupply India conference being held in collaboration with Telangana government.

Saraswat said a Center for Excellence (CoE) in smart manufacturing, aimed at development new processes in manufacturing, including 3D printing, will be set up in Telangana. A detailed project report is being prepared by NITI Ayog for the proposed CoE which has to focus on processes, equipment manufacturing and training among other things, according to him.