Companies abroad will be able to invest up to a maximum 74 per cent in defence manufacturing in India, up from 49 per cent, Finance Minister Nirmala Sitharaman said on the fourth day of mega reform and relief announcements amid the coronavirus pandemic. The higher foreign direct investment (FDI) limit on defence manufacturing is under the automatic route, for which government approval is not required, Ms Sitharaman said.
India will also stop importing weapons that can be made at home, the Finance Minister said. "We will notify a list of weapons and platforms for ban on their imports and fix deadlines to do it," Ms Sitharaman said, adding this move will improve self-reliance on defence manufacturing. "…Every year this list will be increased," she said.
"Even the spares of these weapons have to be manufactured locally. This will help reduce a huge defence import bill," the Finance Minister said.
The Ordnance Factory Board or OFB that makes weapons for the country's military will be made more professional. "We will work to improve autonomy, accountability and efficiency of OFB by corporatisation and not privatisation," the former Defence Minister said.
The OBF runs 41 factories in 24 locations across the country. Any move at privatisation is likely to be resisted by the workers.
Ms Sitharaman said they will simplify the documents needed to buy weapons by making them "realistic".
"Sometimes the general staff qualitative requirement (GSQR) could be unrealistic. We will make it more realistic that matches with the needs. Weapon trial and testing procedures will also be overhauled," Ms Sitharaman said.
The GSQR is among the first steps in buying capital equipment, which contains why the equipment is needed and its expected quality standards.