Open AccessA CRITICAL EVALUATION OF FDI IN DEFENCE IN INDIA: REQUIREMENT, TRENDS AND FORECASTS
Author(s) -
A Shridhar
Publication year - 2019
Publication title -
international journal of engineering applied science and technology
Language(s) - English
Resource type - Journals
ISSN - 2455-2143
DOI - 10.33564/ijeast.2019.v04i08.049
Subject(s) - foreign direct investment , economics , international trade , macroeconomics
Foreign Direct Investment (FDI) is defence is seen as a major source of non-debt financial resource, a means of achieving technical know-how and employment generation and hence the FDI limits in defence have been gradually liberalised. While, FDI in defence is capped at 49% approvals under the automatic route without government, 100% FDI in defence is permitted after government approvals if it brings in niche military technologies. Despite India being the 2nd largest arms importer in the world in an oligopsonic arms market and various measures by the government to attract foreign funding, FDI inflows in defence have been meagre. This paper makes an attempt to qualitatively identify the reasons for poor FDI inflows in defence, compare policies on FDI in defence in other countries, carry out a SWOT analysis on FDI in defence and discuss the requirement of FDI in defence in India. The paper also attempts to quantitatively analyse the trend of FDI inflows in defence using a bivariate regression model and forecast the future FDI inflows in defence using an autoregressive moving average (ARMA) model.