Indian Military

New Delhi – Jubilant Bhartia Group, a renowned diversified Indian conglomerate, has signalled its entry into the defence sector by announcing its plans to manufacture unmanned aerial vehicles (UAVs) in India.

Jubilant Bhartia has set up Jubilant Aeronautics (JAPL), a joint venture wherein Israel’s leading defence corporation called Aeronautics will pick up a 26% stake and produce UAVs. The new venture will be based in Bangalore and will manufacture UAVs for defence and civil purposes besides looking after the integration, maintenance, repair and overhaul of UAVs as well.

The current joint venture has been forwarded to the foreign investment promotion board (FIPB) seeking its clearance to the equity investment by Israel’s Aeronautics. The creation of this joint venture will enable India to have powerful UAVs made indigenously, an area where India lacks superior technology. The UAVs made by Jubilant Aeronautics will assist India’s homeland security as well as the monitoring of oil and gas pipelines, weather forecasting and traffic monitoring and disaster management among others.

The Federation of Indian Chambers of Commerce and Industry (FICCI) has published a paper in response to the solicitation of views by the Department of Industrial Policy and Promotion (DIPP), arguing for conditional increase, if at all, in the limits to investment by foreign players in Indian defense industry beyond the current limit of 26 per cent, to 49 per cent. The DIPP, in its discussion paper, was considering hiking FDI limit up to 74 per cent, and even 100 per cent in some cases.

The Indian Ministry of Commerce allowed the participation of the private sector in the defense industry in May 2001, permitting 100 per cent equity with a maximum of 26 per cent of FDI, subject to licensing. Under the Defense Procurement Procedure (DPP) 2008, limit was raised to 49 per cent FDI on a case-by-case basis. But the Foreign Investment Promotion Board (FIPB) has not, so far, approved the formation of a venture with a 49 per cent FDI component.

FICCI sees little reason to permit FDI above 26 per cent, considering the existing FDI into the Indian defense sector, saying in a statement, “The 26% FDI cap in the defense sector has already attracted top overseas defense OEMs like BAe, EADS, Sikorsky, Lockheed Martin, Electtronica Defence Systems, etc to hugely invest in India’s defense sector.