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Luring Foreign Defence Investment at DefExpo 2022

After keeping the DefExpo an exclusive Indian industry event, the Ministry of Defence is now hoping to attract investment from foreign OEMs by holding a Invest For Defence event pitched as, “first ever marquee event of the Ministry.

The objective is to promote investment in the defence sector in the country both by the Indian industry as well Foreign Original Equipment Manufacturers.

Foreign OEMs can participate in the DefExpo 22 as an exhibitor through, “Indian Subsidiary of Foreign OEM / Division of Company registered in India /Exhibitor having a Joint Venture with an Indian company”.

Indeed, most foreign OEMs do have such an outfit in the country.

Of these a number of global defence majors as Boeing, Air Bus, Crown Group, Dassault, W B Electronics, Indo Russian Rifles, Lockheed Martin, BAE Systems, Safran, L 3 Communications and Amphenol Interconnect have recorded their participation.

Invest India will be inaugurated by Raksha Mantri Shri Rajnath Singh on October 20, 2022 during the 12th edition of DefExpo that is on the third day.

The event is slated to “highlight the requirements of the Armed Forces and policy reforms undertaken by the Government for ease of doing business in the defence sector”.

Invest India is expected to provide the industry with the opportunities and the advantages of investing in the defence sector and contribute to maximising the indigenous production.

Amongst the big names that have been flagged by the Ministry of Defence who are expected to participate are L&T, Adani Defence, Bharat Forge, Saab, Airbus, Lockheed Martin etc., Domestic and Foreign Institutional Investors and Venture Capitalists.

Amongst the other hallmarks are a panel discussion between the industry stalwarts and the MoD and Armed Forces leadership followed by a Q&A session, wherein participants can ask questions from the eminent panelists.

The target audience for the event is industry representatives including those from MSMEs and Start-ups, policy makers and enthusiasts in defence sector.

B2B interaction among the OEMs, including both DPSUs and foreign OEMs, on the ‘Opportunities from large platforms’ though how this will happen only at the event is not clear.

Concurrently, with this B2B interaction an iDEX pitching event for the budding start-ups in Defence is also planned.

For getting investments in the defence sector apart from large Indian defence OEMs and private sector companies such as Adani Defence, a newcomer in the sector but has the brand name of Gautam Adani Asia’s richest person around it, foreign direct investment (FDI) has also been sought.

In the last two years after FDI in the defence sector has been liberalized, FDI inflow reported till May, 2022 is approximately Rs. 494 Crores as per the Ministry of Defence. The Government vide Press Note No. 4(2020 Series) dated 17.09.2020, has liberalised and allowed FDI under automatic route up to 74% and up to 100% through Government route wherever it is likely to result in access to modern technology.

Importantly public interest in defence stocks in India has been very high. Equity investment advisory Equity Master in a report headlined, “The Future for Defence Stocks Keeps Getting Better. Here's All You Need to Know,” has highlighted how equity in defence stocks which includes public and private sector companies has benefited the investors.

There is no doubt retail investor investment in the defence stocks is high particularly DPSUs as these are a safe bet being government owned and are also assured of orders from the services.

The Central Government has also converted 41 Ordnance Factories into 7 Government owned defence corporate entities.

While there are no plans as of now to make these public enterprises some investments may be envisaged and could be watched out for during Invest for Defence event.

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