Lok Sabha Question No. 97 (STARRED), answered on 2015-12-04
Subject: Foreign Investment in Defence Sector
Ministry: DEFENCE
Asked by: ASHOK SHANKARRAO CHAVAN, KUNWAR HARIBANSH SINGH

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE DEPARTMENT OF DEFENCE PRODUCTION

## LOK  SABHA STARRED QUESTION NO.97

TO BE ANSWERED ON THE 4 TH  DECEMBER, 2015

## FOREIGN INVESTMENT IN DEFENCE SECTOR

## *97. SHRI  ASHOK SHANKARRAO CHAVAN: KUNWAR  HARIBANSH  SINGH:

Will the Minister of DEFENCE j{kk ea=h be pleased to state:

- (a) whether the Government has raised the limit of foreign investment in the defence sector;
- (b) if  so,  the  details  thereof  along  with  the  total  investment  made  by  foreign companies in the defence sector after implementation of the said policy, company-wise;
- (c) whether the Government has made any assessment of the impact of the said move on the security of the country;
- (d) if so, the details and the outcome thereof; and
- (e) the preventive steps taken to ensure that the security apparatus of the country is not affected as a result thereof?

## A    N    S    W    E    R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(RAO INDERJIT SINGH)

j{kk jkT; ea=h

¼jkobanzthr flag½

(a)to(e): A Statement is laid on the Table of the House.

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## STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (e) OF LOK SABHA

STARRED QUESTION NO. 97 FOR ANSWER ON 4.12.2015 (a)The Government vide its Press Note No. 12 of 2015 Series dated 24.11.2015 issued  by  Department  of  Industrial  Policy  and  Promotion  has  notified  the revised  FDI  policy  for  Defence  Sector  under  which  Foreign  investment  up  to 49% is allowed under Automatic route and above 49% under Government route on case to case basis, wherever it is likely to result in access to modern and 'state-of-art' technology in the country.  However, Foreign Investment limit has not been raised under the said Press Note. (b)to(d):Since policy has been revised recently, the question does not arise. (e) Foreign investment in Defence sector is subject to the grant of Industrial Licence  under  the  Industries  (Development  and  Regulation)  Act  1951,  by Licensing Committee, an inter ministerial body, which among other things, also takes  into  account  security  clearance  by  Ministry  of  Home  Affairs  (MHA)  and views of Ministry of Defence (MoD). Foreign Investment Promotion Board (FIPB), mandated to recommend approval  of  the  Government  in  respect  of  proposals  of  foreign  investment  in excess  of  49%  is  an  inter  ministerial  body  which  inter-alia  comprises  of representativesof  MHA  and  MoD.    FIPB  also  takes  into  account  security clearance of MHA and views of MoD while considering such proposal of foreign investment. Government  has  also  put  in  place  a  Security  Manual  for  Licensed Defence  Industries.    The  security  manual  prescribes  guidelines  on  physical, information, documentation, cyber and personnel security aspects.  Security is categorised in 'A', 'B' &'C' categories depending upon the products / weapons / equipments manufactured by them.  Defence licensees have to adhere to the safety and security procedures laid down therein based on their categorisation. Security  Manual  also  provides  for  External  Security  Audit  of  the  Licensed Companies  by  Intelligence  Agencies  once  in  two  years  and  Cyber  Security Audit by CERT-IN empanelled Auditors once every year.

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