India's decision to increase its foreign direct investment (FDI) limit to 49% has paved the way for many foreign original equipment manufacturers (OEMs) to establish a presence in the nation, according to a report by Strategic Defence Intelligence (SDI).
Titled 'Future of the Indian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2021', the report offers insights into the Indian defence industry.
India was the world's biggest importer of military equipment from 2011 to 2015. However, the nation is now focusing on domestic defence equipment production to become self-reliant.
The dependency on foreign OEMs is expected to be high, as the nation imports 60% of its defence equipment from foreign countries. India's growing coalitions with other Asian countries provide new opportunities for foreign OEMs to establish export and outsourcing bases for serving the third world and Asian countries in the time to come.
The 'Make in India' programme launched by the government also allows domestic private defence manufacturers to participate in alliances and joint ventures with foreign manufacturers. Some of the major ongoing procurement programmes of these alliances include the acquisition of 15 CH-47F Chinook helicopters and 22 AH-64E Apache attack helicopters.
Despite the attractive business opportunities for foreign OEMS in the Indian defence sector, challenges such as stringent government regulations and policies create entry barriers, according to the report.