Union Government simplified defence rules to woo foreign companies

Jun 3, 2015 10:21 IST

The Union Government on 1 June 2015 simplified the defence rules to boost defence manufacturing in the country and encourage foreign players to explore business in India.

In order to provide a level-playing field to private players, the government withdrew excise and Customs duty exemptions enjoyed by the Ordinance Factory Board and defence Public Sector Undertakings.

It will encourage more private sector firms to collaborate with foreign partners  such as Boeing, Airbus and Lockheed Martin and enter the defence equipment manufacturing business.

Defence Sector of India

Defence manufacturing is one of the key sectors among the 25 sectors identified under the Union Government's Make-in-India campaign. The Indian aerospace and defence market is among the most attractive as the country is the highest importer of defence items in the world.

The Government has recently opened up this sector for private investment by increasing FDI cap in defence to 49 percent and rationalizing conditions. Almost 60 percent items required for industrial licence have now been de-reserved.

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