Saab's Rs 500-cr rocket production plan paves way for more FDI in defence

Swedish defence company Saab can become an integral part of India’s defence ecosystem and contribute to strengthening the country’s national security capabilities. (Image: Saab)

Swedish defence company Saab’s plan to set up a rocket manufacturing facility in India and start production in 2024 got a massive shot in the arm as New Delhi gave the green light to 100 percent foreign direct investment (FDI) in the defence sector. The FDI proposal, valued under Rs 500 crore, was cleared in October.

India now allows up to 74 percent FDI in the defence sector under the automatic route, with clearances beyond that available on a case-by-case basis.

The nod for 100 percent FDI is a significant development, reflecting the country’s willingness to attract foreign investment and expertise to boost its defence manufacturing capabilities and technology transfer. Also, the move can potentially lead to increased collaboration and tie-ups with global defence companies, contributing to the modernisation of India’s defence industry.

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Saab's commitment to Make-in-India and its continued partnership with Indian companies such as Munitions India Limited (MIL) and Advanced Weapons and Equipment India Limited (AWEIL) showed its keenness to foster local manufacturing and collaboration.

Plus, it supports India’s efforts to enhance its defence manufacturing capabilities. By manufacturing key components and products locally, Saab can become an integral part of India’s defence ecosystem and contribute to strengthening the country’s national security capabilities.

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Speaking to CNBC TV 18 earlier, Saab unveiled its vision of becoming an Indian company in the future and expressed its commitment to the ‘Make in India’ initiative as a strategic and long-term approach to its operations in the country. By seeking to move in with 100 percent ownership in certain areas, the Swedish defence manufacturer is looking to deepen its roots in the Indian defence industry and sees India as one of the most important markets globally.

The establishment of Saab FFV India for the manufacture of the latest generation of the Carl-Gustaf M4 system in India is indeed a significant development for both Saab and India's defence sector. The facility, which is expected to be located in Haryana, will play a crucial role in advancing the country's defence manufacturing capabilities.

Also Read: India receives $3.21 mn FDI in defence industries during Apr-Sep FY23

Saab's strong performance in the third quarter, with a 51 percent increase to $76.9 million in operating profit from a year earlier and 31 percent organic sales growth, reflects robust demand for its products and services.