MNCs keen to set up defence manufacturing units: Sharma

Says FDI in the defence sector will not only make India self-sufficient but also help in boosting exports

Multi-national firms have shown interest in setting up units to manufacture defence systems in India which will help reduce dependence on imports and encourage exports.

"Yes. Defence, definitely so," Commerce and Industry Minister Anand Sharma told PTI when asked whether global firms have shown interest in setting up defence manufacturing units in the country.

The government, he said, has already allowed 26% FDI in the sector and now "another window has been created that is for more than 26%. But on those cases where modern technology induction is there...So it will happen."

He said India is very keen about FDI in the sector because "the technology which comes with defence manufacturing have multiple usage".

Citing examples of America and Europe, Sharma said that these countries have leaders in the industry and they have hugely benefited from the technologies which came from defence manufacturing.

"This is what India needs and India must do it," he said.

He said FDI in the defence sector would not only make India self-sufficient but also help in boosting exports and prevent outgo of precious foreign exchange.

India opened up the defence equipment industry to private sector in May 2001, but restricted foreign participation to 26% in this capital-intensive sector. However, proposals beyond 26% will be considered by the Cabinet Committee on Security (CCS) on case-to-case basis.

India is one of the largest defence importers in the world with a minuscule component of exports.

The country imports over USD 8 billion worth of defence equipment and its budget for the sector has been growing at an average of 13.4% annually since 2006-07.

The defence budget for the current fiscal is Rs 2.03 lakh crore, up 14% over the revised estimate of 1.78 lakh crore for 2012-13.