The Department for Industrial Policy and Promotion (DIPP) has proposed change in the government procurement policy that could lead to 100% FDI in a limited manner for the defence sector. CNBC-TV18's Rituparna Bhuyan reports.
The DIPP has proposed that companies that are interested in participating in government bids will have to setup factories for manufacturing their equipments and machineries in India.
The DIPP says 100% FDI will be allowed in such factories in infrastructure and defence sectors. Sources say DIPP has sent their proposal to a committee of secretaries for comments.
The significance of this proposal is that it lead to 100% FDI in a limited manner in the defence sector. For example, if India wants to buy fighter aircrafts, the successful bidder for that tender, will have to setup an integration facility in India and 100% FDI will be allowed in the integration facility.
Also, the DIPP has said the integration facility can also be used as an export hub, however, with safeguards, so that defence equipment manufactured in India do not end up in unfriendly countries.
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