Govt raises FDI limit, wants to corporatise OFB for Aatmanirbhar Bharat

New Delhi: Envisaging an “Aatmanirbhar Bharat,” the government on Saturday announced its decision to raise the FDI (Foreign Direct Investment) limit in the defence sector from 49 percent to 74 percent through the automatic route, impose a ban on the import of certain defence equipment and corporatise Ordnance Factory Board. “Many sectors need policy simplification,” said Finance Minister Nirmala Sitharaman. To support contract management in defence procurement, she said, “The government of India is going to set up Project Management Unit to support contract management.”

‘Make in India’ for self-reliance in defence production

In order to promote Make in India in defence production, the government has said that it will notify a list of weapons/platforms for a ban on import with year-wise timelines, indigenisation of imported spares, and separate budget provisioning for domestic capital procurement. This will help reduce the huge defence import bill, said the Ministry of Defence. The notified list will be revised annually as per India’s expanding defence production capacity.

These reforms will also focus on the indigenisation of imported spared, Sitharaman said. In addition, a separate budget will be provisioned for domestic capital procurement. 

FDI limit raised from 49% to 74%

“The Foreign Direct Investment (FDI) in defence manufacturing under automatic route is also being raised from 49 per cent to 74 per cent,” the Finance Minister said. There will be a time-bound defence procurement process and faster decision making will be ushered in by setting up a Project Management Unit to support contract management, the realistic setting of General Staff Qualitative Requirements (GSQRs) of weapons/platforms and overhauling trial and testing procedures.

The FDI limit in the defence manufacturing under automatic route has now been raised from 49% to 74%. This decision will unleash the true potential of Indian defence production capabilities through ‘Make in India’. The announcements made today will prove to be a Game Changer.

— Rajnath Singh (@rajnathsingh) May 16, 2020

The government has also decided to corporatise the Ordnance Factory Board to improve autonomy, accountability and efficiency in ordnance supplies.

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