Magic Number 49

Group 4

Background

India has permitted FDI in defence only since 2001, when the

private sector was allowed entry in defence production.

Before that, limited production was carried out by some

Defence PSU’s, very few of which were involved in

manufacturing heavy equipment for the armed forces. For

this, India has relied on foreign manufacturers.

As a result, the country has become the world’s largest

importer of arms since 2010.

FactIndia Spends about 2.5% of the GDP on Defence.

Military expenditure in India has been increased by 231%

between 2001 and 2011

Defence Budget

28.34 29.7432.88 33.7

49

0

10

20

30

40

50

60

2009 - 10 2010 - 11 2011 - 12 2012 - 13 2013 - 14

Scale: Axis x – Years

Axis y – Spending in Billion USDSource: http://dipp.nic.in/fdi_statistics/india_fdi_index.htm

www.wikipedia.com

Allocation Of Defence Budget Service Wise

Army Air Force Navy DRDO Other

17.48

5.21

2013 - 14

27.91

0.47

48.93

Scale: Pie Chart is denoted by percentage

Source: http://dipp.nic.in/fdi_statistics/india_fdi_index.htm

Reasons Behind the Plan

• The move is designed to boost domestic defence industry of the country that

imports up to 70 per cent of its military requirements.

• Aimed at accelerating entry of modern technologies to meet the requirements of

the armed forces.

• Barely $5 million of FDI has flowed into India since the defence sector was

thrown open to private companies in 2001 by then NDA government.

• BAE Systems, Lockheed Martin, Airbus Group and Sikorsky intend to set up

manufacturing units here.

• Aimed at ensuring only top defence original equipment manufacturers, with

robust and proven track records, enter the market, with large-scale investment

proposals.

Ananda Mahindra for FDI

Amber Dubey Contradiction FDI

Defence by 2020

Defence Research and Development Organization

(DRDO) prepares a plan according to which between

2020 and 2025 India will be 75 percent

self-reliant in defence.

• Increased FDI will reduce the corruption in Indian defence.

• High stake allows the foreigner as greater incentive to bring

in latest technology to India.

• Significant development in quality and quantity of defence

equipment.

• Proper growth in economic sector.

• Meets the need of armed force.

• Defence industry’s skill will be enhanced.

Pros

• It makes market intelligent and also

provide good understanding and practical

knowledge to the domestic retailers

• This requires raising the rate of investment

as well as generating demand for the

increased goods and services produced.

• Gives best management practices to all

over the world.

Cons

Spies Can Enter

In Times of War