India’s “Make in India” campaign has begun to pay dividends in the defense sector—a field where sharing of technology, processes and patented know-how by global giants does not happen easily.

Author: K.A. Badarinath

Over 1000 companies from 47 countries are said to be exploring joint-venture partnerships in India to manufacture everything from fighter aircraft to battle tanks to missiles, after India raised its foreign investment limit in defense and several other sectors.

Some 38 joint-venture companies have received licenses to manufacture high-tech defense items, and 28 others have been allowed to make products that don’t require industrial licenses.

In November, India raised the threshold for foreign direct investment (FDI) in the defense sector to 49%.

India’s defense spending could reach some $620 million over six years as it modernizes its security forces and becomes a hub for defense exports, with half of that sum going to capital expenditures, according to a joint report by the Federation of Indian Chambers of Commerce and Industry and financial services firm Centrum Capital in March. It projects that Indian companies could reap $168 billion in new business through 2022.

Many foreign companies are considering setting up shop in India now that the government has amended its policies to encourage companies that design, develop and manufacture domestically.

Top players like Airbus, Boeing, Lockheed Martin and French aerospace giant Dassault Aviation have all lined up for joint venture projects and plan to set up facilities in India.

According to the Stockholm International Peace Research Institute, India has been a major arms importer over the past decade. It is also one of the top five nations in defense spending, with $40 billion set aside for the sector by Finance minister Arun Jaitley for 2015-2016.

Another key area that India has also opened up to increased FDI is e-commerce, paving the way for online giants like Amazon and eBay to expand into India’s large retail shopping space. Indian blogger and analyst Gurcharan Das says expanded e-commerce opportunities for foreign players are expected to create 20 million jobs by 2020, with $19 billion in annual sales and 1.3 million retailers heading online.         


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