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    Foreign Investement in India Defence sector

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    Pinto
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    Foreign Investement in India Defence sector

    Post  Pinto on Tue Jun 21, 2016 10:58 am

    100% FDI: Govt bites reform bullet, opens up defence, civil aviation and pharma

    With the objective of providing major impetus to employment and job creation in India, the government on Monday made changes to the FDI policy at a meeting chaired by Prime Minister Narendra Modi.

    According to a release by the government, this is the second major reform after the last radical changes announced in November 2015.

    Most of the sectors would be under automatic approval route, except a small negative list.

    According to the government release, Monday’s amendments to the FDI Policy are meant to liberalise and simplify the FDI policy so as to provide ease of doing business in the country leading to larger FDI inflows contributing to growth of investment, incomes and employment

    Here’s a look at the changes:

    Foreign Investment in Defence Sector up to 100 per cent

    The present FDI regime permits 49 per cent FDI participation in the equity of a company under automatic route.

    FDI above 49 per cent is permitted through government approval on case to case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country. In this regard, the following changes have inter-alia been brought in the FDI policy on this sector:

    * Foreign investment beyond 49 per cent has now been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded. The condition of access to ‘state-of-art’ technology in the country has been done away with.

    * FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.


    Pharmaceutical

    The extant FDI policy on pharmaceutical sector provides for 100 per cent FDI under automatic route in greenfield pharma and FDI up to 100 per cent under government approval in brownfield pharma. With the objective of promoting the development of this sector, it has been decided to permit up to 74 per cent FDI under automatic route in brownfield pharmaceuticals and government approval route beyond 74 per cent will continue.

    Civil Aviation Sector

    The extant FDI policy on Airports permits 100 per cent FDI under automatic route in Greenfield Projects and 74 per cent FDI in Brownfield Projects under automatic route. FDI beyond 74 per cent for Brownfield Projects is under government route.

    With a view to aid in modernization of the existing airports to establish a high standard and help ease the pressure on the existing airports, it has been decided to permit 100 per cent FDI under automatic route in Brownfield Airport projects.

    As per the present FDI policy, foreign investment up to 49 per cent is allowed under automatic route in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service.
    It has now been decided to raise this limit to 100 per cent, with FDI up to 49 per cent permitted under automatic route and FDI beyond 49 per cent through Government approval.

    For NRIs, 100 per cent FDI will continue to be allowed under automatic route. However, foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and non-scheduled air-transport services up to the limit of 49 per cent of their paid up capital and subject to the laid down conditions in the existing policy.

    http://indianexpress.com/article/business/economy/govt-bites-fdi-bullet-opens-up-defence-civil-aviation-and-pharma/

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    Why global defence players from Israel, Russia, Europe set to make beeline for India

    Post  Pinto on Tue Jun 21, 2016 11:09 am

    The government’s decision to allow defence FDI up to 100% without the access to technology clause is expected to result in a surge of interest on part of the foreign vendors, analysts said.

    Global players from Israel, Russia and European companies are expected to make a beeline to India for setting up their plants in India. “Russian Kalashnikov is known to be looking for Indian partners in our country for manufacturing in India,” said Surua Gangadharan, defence analyst.

    However, the real test would be in the case of US companies. Japanese and South Korea firms would also like to come in through 100% FDI route.
    Recently, while talking to Indian media in New Delhi, Jan Widerstrom, Saab India’s chairman, made it clear that the Swedish defence major is looking at more than 49% FDI in defence in the joint venture that will make Gripen in India.

    Under the rules, a company can seek even 100% FDI if it brings in high-technology under the ‘Make in India’ initiative. The government has been working on defining the “state-of-the-art” technology and facilitate the flow of FDI in the defence sector, as several global defence companies have expressed their intention of setting up their manufacturing base in India if the FDI cap is raised to 100%.

    The announcement comes at a time when TATA Boeing Aerospace Limited (TBAL) joint venture has been established to co-produce Boeing AH-64 Apache helicopter fuselages and other aerostructures as well as to pursue integrated systems in aerospace. Interestingly, on Sunday, defence minister Manohar Parrikar in a tweet had termed this venture the largest defence FDI JV.

    According to Puneet Kaura, MD and CEO, Samtel Avionics, “100% FDI in defence is the second good initiative in this quarter for the defence industry from government after announcement of Defence Procurement Policy. This shows the government’s commitment towards defence manufacturing within the country and creating more jobs for youth of the country”.

    Welcoming the government’s decision, Dhiraj Mathur, partner — aerospace and defence, PwC India, “Defence is extremely technology driven and OEMs invest huge sums of money generating technology and IP. The fact that there was no control permitted earlier was a major issue that was quoted for not investing in India. That obstacle has now been removed and coupled with the major simplification in the DPP, OEMs should respond positively and proactively to these path breaking reforms.”

    http://www.financialexpress.com/article/economy/why-global-defence-players-from-israel-russia-europe-set-to-make-beeline-for-india/291422/

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    Re: Foreign Investement in India Defence sector

    Post  Pinto on Tue Jun 21, 2016 11:11 am

    This is a very welcome welcome decision now foreign cos including Russian can open 100% owned subsidiary in india without having to share technology russia russia russia



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    Minor change opens up new vistas in defence

    Post  Pinto on Tue Jun 21, 2016 11:17 am

    New Delhi, June 20

    The decision of the Narendra Modi government to bring in a minor change in the new FDI policy in defence could open it up for manufacturing and job creation, triggering immediate reaction from former Defence Minister AK Antony that the move could lead to Indian defence industry be controlled by NATO and American defence manufacturers.

    Tucked in the slew of sectors being opened up by the Centre today, it said while 49 per cent FDI participation in defence would remain under automatic route, beyond the cap “in cases resulting in access to modern technology in the country or for other reasons to be recorded, the condition of access to ‘state-of-the-art’ technology in the country has been done away with.”

    FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under the Arms Act, 1959, it was announced.


    The government’s move comes in the wake of repeated statements by foreign manufacturers seeking greater control and being less than enthusiastic at 49 per cent cap. By doing away with “state-of-the-art” clause, should give the government greater leeway in determining what modern technology the country is getting. At present, the sector attracted slightly above Rs 1 crore as FDI in last two years.

    For instance, there is an effort to speed up development of the long-delayed Light Combat Aircraft “Tejas”. The IAF has grudgingly accepted some 40 aircraft amid reports that talks are on with Swedish SAAB, which could gel with the programme since the next generation of LCA has to be qualitatively different. Recently, there were reports of Air Chief Arup Raha having test-flown one of the Swedish jets.

    “What the government has done is to make it easy for it to process FDI rather that resting on state-of-the-art technology. It opens up possibility of manufacturing and job creation,” Amit Cowshis, former Financial Adviser (Acquistion) in the Defence Ministry told The Tribune. He also said the larger issue of creating better eco-systems still hung fire with labour laws and land acquisition as cases in point.

    Meanwhile, Antony condemned the move and said it should be withdrawn in national interest. He said the move came immediately after PM Modi’s visit to the US.

    “The move poses a big threat to national security and India’s independent foreign policy. Allowing 100 per cent FDI means India's defence sector is thrown mostly into the hands of NATO-American defence manufacturers. Naturally it will affect India’s independent foreign policy too. It will also threaten the national security,” he said.

    http://www.tribuneindia.com/news/nation/minor-change-opens-up-new-vistas-in-defence/254806.html

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    What does 100% FDI in defence mean?

    Post  Pinto on Wed Jun 22, 2016 7:25 pm

    Mumbai: The government’s decision to liberalize the foreign direct investment rules for the defence sector could force Indian companies to re-look at their plans as it reduces the dependence of original equipment manufacturers (OEMs) on domestic manufacturers.

    On Monday, India opened up the defence sector allowing foreign companies to own as much as 100% equity in the local defence sector through the government approval route in cases where it is likely to result in access to modern technology. The current foreign direct investment (FDI) regime permits foreign companies to own 49% in Indian units through the automatic approval route.

    “Foreign investment beyond 49% has now been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded. The condition of access to ‘state-of-art’ technology in the country has been done away with,” the statement said. The FDI limit for the defence sector has also been made applicable to manufacturing of small arms and ammunitions covered under Arms Act 1959, it added.

    The new rules could mean that Indian companies that were rushing to tie up with OEMs in expectation of future business may find that their partners choose to enter the market on their own.

    Under the previous rules, foreign OEMs (original equipment manufacturers) were required to form joint ventures with domestic firms if they wanted to establish a manufacturing base in India. With the amendment, an OEM can independently plan and implement operations in India.

    This would save the time spent on lengthy negotiations with Indian companies, said Kabir Bogra, associate partner at consulting firm Khaitan & Co.

    The new guidelines could also mean greater competition for domestic firms.

    “The 2016 iteration of the Defence Procurement Procedures (DPP) has defined an Indian company to include within its scope wholly owned subsidiaries. With the amendment, foreign OEMs and manufacturers can compete in the Indian defence procurement space similar to Indian companies,” Bogra said.

    Anuj Prasad, partner, Shardul Amarchand Mangaldas & Co., has a different view. Prasad says that OEMs are aware that they need to tie up with Indian companies and the latest FDI relaxations will ensure a level playing field.

    Tata Motors Ltd, which is well entrenched in the defence sector, shared that view.

    “A 100% FDI in defence will create a win-win situation for the country’s defence forces, local industries and international OEMs. It will ensure availability of cutting edge technologies for the defence forces, boost local manufacturing in India and provide assured returns for international OEMs. The move will also enhance overall R&D to develop and deploy solutions catering specifically to the country’s security needs,” the company’s spokesperson said in a statement.

    Surjit Haridas, deputy director general, Confederation of Indian Industry (CII), noted that Indian firms may not take too much of a hit from the new policy, which clarifies that FDI will be allowed only for technologies that are not available in India.

    http://www.livemint.com/Industry/MqTrPlsdKy1D0YUGnVfygI/What-does-100-FDI-in-defence-mean.html

    George1
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    Re: Foreign Investement in India Defence sector

    Post  George1 on Wed Jul 13, 2016 4:07 am

    Airbus Helicopters company will manufacture components in India for its military helicopters

    http://bmpd.livejournal.com/2010572.html


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