The Indian Defence sector, the second largest armed force is at the cusp of revolution. The Government has identified the Defence and Aerospace sector as a focus area for the ‘Atmanirbhar Bharat’ or Self-Reliant India initiative, with a formidable push on the establishment of indigenous manufacturing infrastructure supported by a requisite research and development ecosystem.
GOI aims to achieve a turnover of USD 25 Bn including export of USD 5 Bn in Aerospace and Defence goods and services by 2025.
Defence exports reach an all-time high of approx. INR 16,000 crore in FY 2022-23, over 10-times increase since 2016-17. India is now exporting defence equipment to over 75 countries. Defence exports grew by 334% in the last five years.
25% of defence R&D budget has been earmarked for private industry and start-ups which will pave the way for innovation of new defence technologies in India.
FDI in the defence sector is allowed up to 74% through automatic route (from earlier 49%) for companies seeking new industrial licenses. FDI beyond 74% and up to 100% will be permitted under the Government route.
India’s defence production rose more than 12% last fiscal year and crossed the 1 trillion rupee ($12 billion) threshold for the first time, as the country tries to reduce its reliance on imports from countries such as Russia. The value of India’s local defence production jumped to 1.07 trillion rupees in the year that ended on March 31 and was expected to rise further.
DRDO Military use products available for export . India’s defence exports have risen too, jumping 24% to about 160 billion rupees last fiscal year, according to government data. Following are the incentives currently being provided in Defence sector:
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Defence Production Investment Promotion Policy
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Special concession for allotment of Government land
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Special incentive for establishment of units
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Capital subsidy for establishing basic infrastructure of electricity, water and road on undeveloped land.
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Technical assistance/support
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Special support for units established in joint collaboration with public enterprises of defence sector/Units under the Ministry of Defence
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Enhancement of funding under the Technology Development Fund (TDF) scheme of the Ministry of Defence to INR 50 crore per project
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Department of Defence Production waives off Quality Assurance Charges which would make the defence products cost competitive in global market
How can we help?
We at PPIPL identify the eligible project for Design, Development and Manufacturing the advanced defence Systems & Sub Systems as per approved list by DRDO and facilitate successful joint ventures (JV) and provide offset structuring, tax and regulatory services, transaction and implementation support.
