The Government of India, to bring about the parity between Private Sector Manufacturers with Ordinance Factory Board (OFB) and Defence PSUs, has withdrawn excise and customs duty exemptions available to the goods manufactured by such OFB and PSUs vide Notifications No.23/2015- Central Excise and No.29/2015- Customs dated 30.04.2015. Many private companies, including multinational companies, has long-awaited for this change. These Notifications came into force from June 1, 2015.
India is the highest importer of Defence items in the world. Accordingly, Defence manufacturing has been identified as one of the key sector among 25 sectors under Make in India campaign launched by the Government of India. Systematically the sector has been opened up for private investment by increasing FDI cap in defence to 49% and rationalizing conditions. Now the foreign Original Equipment Manufacturers (OEMs) would have the scope of investing in India by choosing partners on the basis of efficiency and effectiveness. It is quite evident that the new Government has taken number of initiatives to incentivize private sector and foreign OEMs to engage in the Defence and Civil Aerospace sector. The simplifications of rules and procedures to promote defence manufacturing and exports in India would stimulate high investments in this sector.
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