FDI IN DEFENCE

SUBMITTED BY:SOMIT RANJAN DASTANUSHREE SAHAAESHA BRAHMBHATTCHANDRA PRAKASH MAURYAAVINASH KUMAR SWAINMITALI BARMANBITOPAN NATHRUPAM DASDIVYA KHUNTREETESH AGARWAL

CONTENTS•WHAT IS FDI?•HISTORY OF FDI•FDI IN DEFENCE•ROUTES FOR TAKING PERMISSION OF FDI IN INDIA•RECENT POLICIES•WHY COUNTRY SEEK FDI• DEMERITS OF FDI IN DEFENCE• CONCLUSION

What is FDI?Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.  

HISTORY OF FDI At the time of independence, the attitude towards foreign capital was one of fear and suspicion.The suspicion and hostility found expression in the Industrial Policy of 1948 which, though recognizing the role of private foreign investment in the country, emphasized that its regulation was necessary in the national interest. Because of this attitude expressed in the 1948 resolution, foreign capitalists got dissatisfied and as a result, the flow of imports of capital goods got obstructed. As a result, the prime minister had to give CERTAIN assurances to the foreign capitalists in 1949.

Foreign investment was introduced in 1991 under foreign exchange management act (FEMA), driven by then finance minister Manmohan singh.

WHY COUNTRY SEEKS FDI? • Domestic capital is inadequate for purpose of economic growth;• Foreign capital is usually essential, at least as a temporary measure, during the period when the capital market is in the process of development;• Foreign capital usually brings it with other scarce productive factors like technical know how, business expertise and knowledge.

FDI IN DEFENCEOnly Defence Manufacturing Coupled With Economy Might, Can Make India is Supreme Power.

The government has announced FDI cap in defence at 26 per cent, even while stating that higher foreign investment in ‘state-of-the-art’ technology manufacturing will be considered by the Cabinet Committee on Security (CCS) on a case-to-case basis.

ROUTES FOR FDI

• AUTOMATIC ROUTE

• GOVERNMENT ROUTE

AUTHORITIES DEALING WITH FDI

• Approval from R.B.I• Permission from FIPB• Permission from SIA • Permission from FIIA• Investment Commission• Project Approval Board

RECENT POLICIES:FDI in defence sector was first started in 2001. As per the rules and regulations prevailing then, the Fdi cap was set as 26%.

. The prevailing cap on FDI was suggested to be 47% by some experts but ultimately, it stood at 26% as per a 2001 policy.. As per current provisions, the foreign supplier is obliged to offset 30% of the contract value, or 50% in very large projects such as the MMRCA fighter contract, through domestic sub-contracts.

Boeing Defense, Space & SecurityOn January 1, 2009, the government of India purchased eight Boeing P-8I long-range maritime reconnaissance and antisubmarine aircraft. The P-8I is an India-unique variant of the U.S. Navy’s P-8A Poseidon. In June 2011, India’s Ministry of Defence signed an agreement with the U.S. government to acquire 10 Boeing C-17 Globemaster III airlifters. The C-17 is the largest defense contract signed by the Indian government with the United States Recently. Boeing has submitted a $300-million plan for investment in the Indian defence industry as "offsets" for the four additional P8I long-range maritime patrol aircraft that India intends to buy for its navy, a senior company official has indicated.

Boeing Defense, Space & SecurityOn January 1, 2009, the government of India purchased eight Boeing P-8I long-range maritime reconnaissance and antisubmarine aircraft. The P-8I is an India-unique variant of the U.S. Navy’s P-8A Poseidon. In June 2011, India’s Ministry of Defence signed an agreement with the U.S. government to acquire 10 Boeing C-17 Globemaster III airlifters. The C-17 is the largest defense contract signed by the Indian government with the United States Recently. Boeing has submitted a $300-million plan for investment in the Indian defence industry as "offsets" for the four additional P8I long-range maritime patrol aircraft that India intends to buy for its navy, a senior company official has indicated.

For example- the Boeing company;It is an American multinational aerospace and

defense corporation. Founded in 1916 by William E. Boeing in Seattle, Washington.

The close relationship between Boeing and India goes back some 70 years, when Tata Airlines first flew DC-3 aircraft. India then entered the jet age on the wings of Boeing commercial jetliners, and Boeing jets continue to be the mainstay of the country’s domestic and intercontinental commercial fleets.Today, Boeing also partners with India to meet the country’s aerospace and defense requirements.

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Boeing Defense, Space & SecurityOn January 1, 2009, the government of India purchased eight Boeing P-8I long-range maritime reconnaissance and antisubmarine aircraft. The P-8I is an India-unique variant of the U.S. Navy’s P-8A Poseidon. In June 2011, India’s Ministry of Defence signed an agreement with the U.S. government to acquire 10 Boeing C-17 Globemaster III airlifters. The C-17 is the largest defense contract signed by the Indian government with the United States Recently. Boeing has submitted a $300-million plan for investment in the Indian defence industry as "offsets" for the four additional P8I long-range maritime patrol aircraft that India intends to buy for its navy, a senior company official has indicated.

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MERITS OF FDI IN DEFENCE

• INFLOW OF EQUIPMENT AND NEW TECHNOLOGY.• COMPETETIVE ADVANTAGE AND INNOVATION.

DEMERITS OF FDI IN DEFENCE: •The private sector has not been able to harness its strengths for the defence sector.•The present 26% ceiling on FDI limits the economic incentive to the foreign investor•The economic incentives and the profitability are the key determinator for the foreign investors.

CONCLUSION

Goal must be to develop indigenous technologies and to reduce reliance on imports.

T H A N K Y O U

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