India has recently granted approval for Sweden’s Saab to establish a new manufacturing facility in the country, marking a significant milestone as the first foreign company to receive 100% Foreign Direct Investment (FDI) in India’s defense projects. While India previously permitted up to 74% FDI in the defense sector under the automatic route, clearances beyond that threshold were subject to individual assessment.
The government relaxed these regulations in 2015 to encourage foreign investments, yet until now, no foreign firm had received permission for 100% FDI in defense.
FDI Proposal Approval: Last month, the Indian government approved a ₹500 crore FDI proposal from Sweden’s Saab, marking a historic moment in India’s defense industry. This decision represents a significant departure from the previous FDI restrictions in the sector.
Historical Perspective: Prior to Saab’s success in securing 100% FDI, French firm DCNS sought similar approval in 2016. They aimed to establish a subsidiary in India for the development of advanced technologies enhancing submarine endurance. However, DCNS did not receive the permission to invest over ₹100 crore in their Indian subsidiary, DCNS India Pvt Ltd.
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