Defence

We have provided comprehensive advisory and compliance guidance to clients on obtaining licences, formulating business strategy, executing commercial and financial transactions, defence procurement and offset procedures, technology licensing arrangements, and enabling strategic mergers and acquisitions, and joint ventures.

The defence sector in India is poised to see incremental growth backed by changes in policies and business practices to aid indigenous manufacturing in the sector.

The Indian Government’s move to liberalise foreign direct investment (FDI) in the sector to 74% (for companies seeking new industrial licenses) via the Automatic route (i.e., without prior Government approval) and 100% through the approval route is one such policy measure that is likely to spur private sector participation, particularly from global corporations. The liberalisation of the FDI limit enables foreign defence manufacturers and investors to own up to 74% of the share capital of an Indian defence manufacturing company as well as to scale up their ownership in existing Indian joint venture companies engaged in the defence manufacturing sector with a view to having better control and oversight over the operations of such a company.

A recent amendment to the Defence Acquisition Procedure 2020 in April 2022 indicates a phased ban on the import of defence equipment. Where indigenous production is not feasible, explicit approvals are needed from the Defence Acquisition Council (DAC), and in some cases, the Defence Minister, for the import of such items. These developments are in line with the Government’s ‘Make in India’ policy, which is focused on promoting indigenous manufacturing of defence products with a long-term view to achieving a trade balance in the export and import of defence equipment.

To capitalise on the opportunities offered by the sector, domestic and foreign defence manufacturing companies need to understand the changing regulatory and legal landscape to align their business and operational plans accordingly.

At Trilegal, we have worked with leading players and multinational corporations in the sector to provide comprehensive solutions, advisory, and compliance guidance on obtaining licences, formulating business strategy, executing commercial and financial transactions, defence procurement and offset procedures, and enabling strategic mergers and acquisitions, and joint ventures. We have also assisted companies with their entry/exit strategies, market due diligence, incorporation of special purpose vehicles, review of their offset proposals to meet offset obligations and technology licensing arrangements in the defence sector.

Some of our clients in this space include –