The government had also announced two defence corridors-- in Tamil Nadu and Uttar Pradesh.
Chennai: Defence and aerospace sectors, the corner stones of the government’s ambitious Make in India programme, garnered relatively miniscule foreign direct investment (FDI) in the last five years.
While the country attracted FDI valued around $286 billion in the past five years across sectors, defence and aerospace, which were projected as high potential sectors under ‘Make in India’, could grab only a measly Rs 1,834 crore, according to government data released on Monday.
“As per the data furnished by 79 companies operating in Defence and Aerospace sector, so far, FDI inflows of over Rs 1,834 crore have been reported after 2014 under both government and automatic route,” it said.
In May 2001, the defence sector, until then reserved for the public sector, was opened up for 100 per cent Indian private sector participation and foreign direct investment up to 26 per cent.
Further, the government later allowed FDI up to 49 per cent under the automatic route and above 49 per cent through the government route wherever it is likely to result in access to modern technology or for other reasons to be recorded.
The government had envisaged that by allowing higher FDI in the defence sector, the global companies having high-end technologies can be encouraged to set up their manufacturing base in India in collaboration with Indian companies, thereby, resulting in creation of employment opportunities, saving foreign exchange and increasing indigenisation.
The government had also announced two defence corridors-- in Tamil Nadu and Uttar Pradesh. While launching the Tamil Nadu Aerospace and Defence Industrial Policy at the Global Investors Meet in Chennai in January 2019, the then defence minister Nirmala Sitharaman had said: “…by announcing the corridor, we have invited quite a lot of manufacturers from abroad to come, choose the location where they want to establish their unit and start producing defence equipment”. But the investments are still nothing worth writing home about.