AMN
In a bid to encourage private and foreign companies to make equipment for the armed forces in India, the government has withdrawn excis
e and Customs duty exemptions enjoyed by the Ordinance Factory Board and defence Public Sector Undertakings.
The move is expected to give a push to the government’s Make in India initiative and also likely to encourage more private sector firms to collaborate with foreign partners and enter the defence equipment manufacturing business.
An official statement said, with this initiative, the Government has also fulfilled demand of foreign Original Equipment Manufacturers, OEMs such as Boeing, Airbus, Lockheed Martin, BAE Systems who are actively exploring the scope of future investments in India. It said, 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.
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. Defence manufacturing is one of the key sectors among the 25 sectors identified under the Make-in-India campaign.
The Government has systematically opened up the sector for private investment by increasing FDI cap in defence to 49 per cent and rationalizing conditions. Almost 60 per cent items required for industrial licence have now been de-reserved. Business re-engineering process has been effected across Departments and Ministries for a favourable manufacturing and export platform for private sector companies.
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.