Govt simplifies defence rules to woo foreign companies

The government today said steps taken to boost defence manufacturing will encourage foreign players such as Boeing, Airbus and Lockheed Martin to explore business opportunities in the country.

In order to provide a level-playing field to private players, the government withdrew excise and Customs duty exemptions enjoyed by the Ordinance Factory Board and defence PSUs.

"This will provide a level-playing field... By taking away the strategic advantage with PSUs for quoting lower rates in open bids.

"With this initiative, the government has also fulfilled demand of foreign Original Equipment Manufacturers (OEMs) such as Boeing, Airbus, Lockheed Martin, BAE Systems etc which are actively exploring the scope of future investments in India," a Commerce and Industry Ministry statement read.

It said the move will also send a definitive message to foreign OEMs that India is open to business for defence manufacturing.

The Indian aerospace and defence market is among the most attractive globally as the country is the highest importer of defence items in the world, it added.

The government has systematically opened up the sector for private investment by increasing FDI cap in defence of up to 49 per cent and rationalising certain conditions.

Almost 60 per cent items required for industrial licence have now been de-reserved.

Defence manufacturing is one of the key sectors among the 25 sectors identified under the Make-in-India campaign.

"A number of initiatives have been taken by the new government to incentivise the private sector, including foreign OEMs, to engage in the Defence and Civil Aerospace sector," the statement said.

It added that a series of consultations have been held across ministries and departments to enable simplification of rules and procedures to promote private participation in defence manufacturing and exports.