Privatization of Defence Production
(Source: Indian Ministry of Defence; issued March 12, 2018)
The Government is promoting privatisation in Defence Production. Till February 2018, Department of Industrial Policy & Promotion (DIPP) has issued 348 licenses to 210 Indian Companies for manufacture of various licensable defence items. Apart from this, one manufacturing license has also been issued by Ministry of Home Affairs for Small Arms and Ammunitions.

Till February 2018, 70 license companies covering 114 licenses have reported commencement of production.

The Government has partially withdrawn the public investments in respect of Defence Public Sector Undertakings (DPSUs) Bharat Electronics Limited (BEL) and BEML Ltd. The Government shareholding now in above DPSUs is 66.72% and 54.03 % respectively.

As per extant Foreign Direct Investment (FDI) policy in defence sector, foreign investment up to 49% is permitted under automatic route. Foreign investment beyond 49% (up to 100%) is permitted through government approval in cases resulting in access to modern technology in the country or for other reasons to be recorded.

FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959. Further, foreign investment in defence sector is subject to other conditions of extant FDI Policy as amended from time to time.

So far, 40 FDI proposals / Joint Ventures have been approved for manufacturing of various defence equipment both in public and private sectors.

This information was given by Raksha Rajya Mantri Dr. Subhash Bhamre in a written reply to Shri Neeraj Shekhar and Shri Ravi Prakash Vermain Rajya Sabha today.


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