Q12.Foreign Direct Investment (FDI) in the defence sector is now set to be liberalized: What influence this is expected to have on Indian defence and economy in the short and long run?

Liberalizing FDI in India's defence sector aims to enhance domestic capabilities and reduce import dependence.

Short-run Influence

• Defence: Access to advanced technology, reduced imports, and a boost to domestic manufacturing and job creation.
• Economy: Increased capital inflow, immediate job generation, and technology transfer, stimulating manufacturing output.

Long-run Influence

• Defence: Fosters self-reliance (Atmanirbhar Bharat), strengthens R&D, enables defence exports, and enhances strategic autonomy.
• Economy: Sustains economic growth, integrates India into global defence supply chains, boosts 'Make in India', and generates foreign exchange.

Concerns include security risks and potential over-dependence. A robust policy framework, mandatory technology transfer, domestic content requirements, and promoting joint ventures are essential to ensure indigenous R&D and MSME growth.

Strategic management of FDI can build a strong, self-reliant defence industrial base and drive economic prosperity.