In a groundbreaking development, India has granted its first-ever 100% Foreign Direct Investment (FDI) in the defence sector, bestowing the honor upon Sweden’s Saab. The FDI proposal, amounting to less than ₹500 crore, received the green light last month. India’s existing policy permits up to 74% FDI in the defence sector via the automatic route, with approvals for higher FDI attainable on a case-by-case basis. Remarkably, despite the relaxation of clearance rules in 2015, no foreign entity had, until this juncture, secured permission for 100% FDI in defence.
A newly established entity, Saab FFV India, is set to emerge, dedicated to manufacturing the latest iteration of the Carl-Gustaf M4 system. Expected to be situated in Haryana, this facility will incorporate cutting-edge technologies, encompassing advanced sighting tech and carbon fiber winding for the Carl-Gustaf system. The shoulder-fired rockets, already in extensive usage by the Indian armed forces, are poised for export upon the commencement of local production.
Mats Palmberg, Chairman and Managing Director of Saab India, expressed the company’s pride in being the inaugural global defence enterprise to receive Indian government approval for 100% FDI, emphasizing their commitment to “Make in India.” He affirmed Saab’s eagerness to continue collaborating with Indian partners and contribute to the production of Carl-Gustaf systems within India.
This venture will mark Saab’s inaugural Carl-Gustaf M4 production line established outside Sweden, with manufacturing operations slated to kick off next year. The shoulder-launched weapon system boasts widespread usage by the US, European, and Indian armed forces, serving the purpose of neutralizing fortified enemy positions, armored units, and personnel.
In a historical precedent, back in 2016, the French firm DCNS pursued the distinction of becoming the first foreign entity to seek approval for 100% FDI in establishing an Indian subsidiary, focusing on advanced systems that would enhance submarine underwater endurance. Despite the substantial investment proposal exceeding ₹100 crore, DCNS India Pvt Ltd’s aspirations to develop high-end critical defence technologies were not realized, due to the absence of requisite permissions.
The approval of 100% FDI in the defence sector marks a momentous stride for India’s defense industry, opening new avenues for collaboration and the bolstering of indigenous production capabilities. This strategic partnership with Saab not only underscores the nation’s commitment to self-reliance in the defence sector but also heralds a significant milestone in its pursuit of advanced defense technologies.
