NEW DELHI: The government's decision to raise the FDI limit in defence manufacturing to 74 per cent from 49 per cent under the automatic route will prove to be a "game-changer" as it will help in realising India's true potential in the production of weapons and military hardware, Defence Minister Rajnath Singh said on Saturday.
His reaction came after Finance Minister Nirmala Sitharaman unveiled a series of long-pending reforms for the defence sector which included making provisions for separate budgetary outlay to procure Indian-made military hardware, increasing the FDI limit and generating a year-wise negative list of weapons which can't be imported.
"The FDI limit in the defence manufacturing under automatic route has now been raised from 49 per cent to 74 per cent. 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," the defence minister tweeted.
It is expected that increasing the FDI cap will encourage global defence majors like Lockheed Martin, Boeing, Airbus and Dassault Aviation to set up manufacturing hubs in India and bring niche technology without hesitation as the firms will have majority stakes in their Indian subsidiaries.
At present, up to 100 per cent FDI is allowed in the defence manufacturing on a case-to-case basis.
In February, Prime Minister Narendra Modi set a target of USD 5 billion worth of military exports in the next five years and invited global defence majors to set up manufacturing hubs in India.
In another initiative, the government has also decided to encourage domestic production of spare parts of military systems procured from defence majors abroad.