FICCI welcomes the proposal put forth by the ministry of commerce and Industry to enhance FDI levels in defence beyond 26% to higher levels up to 49%, 74% or even 100% in exceptional cases, to develop a Defence Industrial Base (DIB), indigenously design & manufacture Defence & Aerospace products tailored to the needs of Indian armed forces, and to create opportunities for employment in the country.

While higher levels of FDI were already allowed in the existing policy, on a case-to-case basis, FICCI sees this proposal in the light of increasing the share of manufacturing in GDP to 25% as enshrined in the National Manufacturing Policy.

FICCI recognises the strategic nature of the defence sector and therefore advocates that adequate and mutual strategically beneficial safeguards be put in place while deciding higher levels of FDI in defence production. Exceptions allowing FDI even up to 100% should be allowed as exceptions, on case to case basis, in cases such as aircraft engines, advanced missile guidance systems, seekers, production of smart materials, high strength carbon fibre etc, for which investments can be justified only by volumes available through integration with the global supply chain of the OEM's.