India has granted the first 100% foreign direct investment (FDI) clearance in the defense sector, with Sweden’s Saab receiving approval to establish a facility dedicated to the production of components for the Carl-Gustaf system.
The FDI proposal, valued at just under INR 500 crore ($60 million), received the green light last month. Defense sector investments in India have traditionally been limited to 74% FDI under the automatic route. This marks the first instance of 100% FDI approval in the defense sector, despite the sector's relaxed clearance rules since 2015, India's Economic Times reported.
The newly formed company, "Saab FFV India," is set to take the lead in manufacturing the latest iteration of the Carl-Gustaf M4 system. The proposed facility, expected to be located in Haryana, will be equipped with technologies, including advanced sighting systems and carbon fiber winding capabilities for the Carl-Gustaf system. This shoulder-fired rocket system, already in extensive use by the Indian armed forces, holds the potential for export following the commencement of local production.
"We are proud to be the first global defense company to gain approval from the Indian government for 100% foreign direct investment in our new Carl-Gustaf manufacturing facility in India. This reflects Saab's unwavering commitment to 'Make in India,' and we eagerly anticipate further collaboration with our Indian partners while supporting the Indian armed forces in the domestic production of the Carl-Gustaf system,” Mats Palmberg, Chairman and Managing Director of Saab India, was quoted as saying by Indian media.
This venture marks Saab's first Carl-Gustaf M4 production line outside of Sweden, with manufacturing operations scheduled to commence in the upcoming year.
In a similar vein, in 2016, French company DCNS sought approval for 100% FDI to establish an Indian subsidiary, DCNS India Pvt Ltd, dedicated to developing advanced technologies for submarines to enhance their underwater endurance. However, despite its request to invest over INR 100 crore in India, it did not receive the necessary clearances.