FDI in Defence Sector

Press Information Bureau 

Government of India

Ministry of Defence 

FDI in Defence Sector 

No agreement has been signed by the Government with other countries relating to FDI in Defence sector. However, in pursuance to the Inter-Governmental Agreement between India and Russia signed in February 1998, a Joint Venture Company, BrahMos Aerospace, between the Defence Research & Development Organisation (DRDO) of India and NPO Mashinostroyenia of Russia has been formed for design, development, production of a Supersonic Cruise Missile. 

In 2013-14, out of the total procurement amounting to Rs.93,217/- crore by the three Services (Army, Navy & Air Force), items worth Rs.55,014/- crore (59%) have been procured from indigenous sources which include public as well as private sector companies. 

After opening up of the Defence Industry Sector for Indian Private Sector Participation, so far 33 FDI proposals / Joint Ventures have been approved in Defence sector for manufacture of various defence equipment, both in public and private sector. FDI amounting to Rs.24.36 crore (US$4.94 Million) has been received in the Indian Defence Sector from April 2000 to September 2014. The following safeguards have been put in place in the current FDI Policy: 

• The applicant company seeking permission of the Government for FDI up to 49% should be an Indian company owned and controlled by resident Indian citizens. 

• The management of the applicant company should be in Indian hands with majority representation on the Board as well as the Chief Executives of the company / partnership firm being resident Indians. 

• Chief Security Officer (CSO) of the investee / joint venture should be resident Indian citizen. 

This information was given by Minister of State for Defence Rao Inderjit Singhin a written reply to Shri PK Biju and others in Lok Sabha today.