FDI in defence is subject to industrial licensing: Parrikar

The Dollar Business Bureau

The Government on Tuesday said that the foreign investments in defence sector are subject to industrial licensing, under the Industries (Development & Regulation) Act, 1951.

“Foreign investment in defence industry sector is subject to industrial licensing. Licensing Committee in Department of Industrial Policy and Promotion (DIPP) takes into account security clearance from the Ministry of Home Affairs and views of the Ministry of Defence,” Defence Minister Manohar Parrikar said in a written reply to Rajya Sabha.

The “Security Manual for Licensed Defence Industries” enables the licensed defence companies to follow security guidelines according to its security instructions/architectures.

“The manual provides detailed guidelines on physical security/materials security/documents security/information security etc. The companies are also subjected to external security audit by intelligence agencies once in two years and cyber security audit by CERT-IN empanelled auditors once every year,” he said.

The government, in June this year, notified defence products list for issuing industrial license for manufacturing licensable items under the act.

As per the revised guidelines, the government allows 49 percent FDI through automatic route and beyond 49 percent under government route in cases wherever it is possibly in access to the modern technology or for other reasons to be documented.

The defence sector in India has attracted FDI of just Rs.1.1 crore in the last two years.