DCNS Seeks Approval for 100% FDI in Developing Systems to Provide More Endurance to Submarines.
NEW DELHI: In the first major foreign investment proposal for
high-end defence technology after the government relaxed rules last
year, French firm DCNS has sought approval to set up a fully owned
Indian subsidiary that will develop advanced systems to give submarines
more endurance underwater.
DCNS, a global leader in submarine systems, has requested clearance from
the Foreign Investment Promotion Board to invest over Rs 100 crore in
DCNS India Pvt Ltd, which is currently restricted to providing services,
officials involved in the process told ET.
In rules that were changed in November, FDI of up to 49% has been
allowed in defence under automatic rule and proposals with higher
investment levels have to be approved on a case-by-case basis by FIPB in
consultation with ministries.
DCNS declined to comment on the development. Analysts said the proposal
will be a test case for the new policy, which does away with cumbersome
process that involved approval by the Cabinet Committee on Security for
all applications above 49%.
"Technology on offer is cutting-edge and will prove critical in India's
next line of submarines (P75I). The ball is now in the government's
court. Whatever is decided could serve as a yardstick for future
proposals," Ankur Gupta of EY India said.
Officials said the DCNS proposal is structured around the new policy
that is aimed at development and manufacturing of high-tech and complex
equipment in India. The technology that DCNS wants to bring is Air
Independent Propulsion (AIP) systems, which give conventional submarines
substantially greater endurance underwater.
AIP is essential for future Indian submarines, with the Defence Research
& Development Organisation also trying its hand at a developmental
project. There are also plans to fit the AIP system on some Scorpene
submarines that are under construction in Mumbai. DCNS, which has
contracted six Scorpenes, is in contention for a follow-on order for at
least two more.
The French company, which is also bidding for a mega-contract to build
four landing platform docks in partnership with Reliance Defence, has
asked for 100% FDI as it wants to develop AIP equipment in India with
local companies, including preparation of detailed drawings, 3D
modelling and design for future submarine systems.
Despite efforts to market India as a defence manufacturing hub, actual
FDI inflow in the sector has been dismal, with just over Rs 1crore
flowing in last year.
Reference : http://www.indiandefensenews.in/
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