'Higher FDI, freer licensing regime will spur Ind def prod'

NEW DELHI: Increased FDI in the defence sector and a liberalised industrial licensing regime would help to accelerate the indigenisation of the military sector, Secretary (Defence Production) GC Pati said here today.

"Policy reforms like setting up of order of priority of defence procurement from Indian companies, higher FDI cap and liberalised industrial licensing regime will accelerate indigenisation," Pati said at a seminar here on defence technology.

The government has recently increased the FDI limit in defence sector from 26 per cent to 49 per cent and also pruned the list of equipment which require an industrial licence from the Defence Ministry for their production.

"Components and sub-systems have been taken out of the licensing regime. We have significantly reduced entry barriers for small and medium enterprises and the (Rs 100 crore) Technology Development Fund (TDF) would help them in particular," he said.

Public sector undertakings like Hindustan Aeronautics Ltd (HAL) have welcomed the move to increase FDI in defence saying it would help bring about an increase in domestic manufacturing in the sector.