Govt notifies FDI norms in defence

after the bold step to allow 100 per cent private participation in defence industry with 26 per cent fdi, the government on friday notified detailed guidelines making it imperative for companies seeking licence to produce arms and ammunition to have resident indian as chief executives. the guidelines for licensing production of arms and ammunitions, said all the private sector companies should have resident indians as chief executives and fixed a three-year lock-in period for transfer of equity from one foreign investor to another. emphasising that arms and ammunition produced by the private manufacturers would be primarily sold to the ministry of defence, the guidelines set out that smaller quantities could be sold to to para-military organisations and state governemnts with approval of the defence ministry. licence application for production of arms and ammunition would be given by the department of industrial policy & promotion, in the commerce and industry ministry, but cases involving fdi will be considered by the fipb and licences given in consultation with the defence ministry, an official release said here. as per the guidelines, the applicant has to be an indian company or parternship firm wherein management of the applicant company should be in indian hands with majority representation on the board as well as the chief executive of the company/ parternship firm being resident indians. according to the guidelines, while full particulars of the director and chief executives would have to be furnished with the applications, government would reserve the right to verify the antecedents of the foreign collaborators and domestic promoters, including their financial standing and credentials in the world market. in this, precedence would be given to the original equipment manufacturers or design establishments and companies having a good track record of past supplies to armed forces, space and atomic energy sectors and having an established r&d base. there would be a three-year lock-in period for transfer of equity from one foreign investor to another foreign investor -- including nris and overseas corporate bodies -- with 60 per cent or more nri stake, and such trasfer would be subject to prior approval of the fipb and government, it said. while there is no minimum capitalisation for the fdi, the licensing authority would satisfy itself about the adequacy of the net worth of the foreign investor taking into account the category of weapons and equipment that are proposed to be manufactured. the defence ministry is not in a position to give purchase guarantee for products to be manufactured, but planned acquisition programme for such equipment and overall requirement would be made available to the extent possible. import of equipment for pre-production activity including development of prototype by the applicant's company would be permitted while adequate safety and security procedures would have to be put in place by the licensee once the licence is granted and production commences.

Govt notifies FDI norms in defence

<img src=/photo.cms?msid=966893777 align=left>AFTER the bold step to allow 100 per cent private participation in defence industry with 26 per cent FDI, the government on Friday notified detailed guidelines making it imperative for companies seekin...

More from our Partners

Popular Categories

Hot on Web

In Case you missed it

Top Searched Companies

Latest News

Download ET APP

Follow us on

become a member