India has granted its first 100% foreign direct investment (FDI) clearance in the defense sector, signaling a significant step toward bolstering the country’s defense manufacturing capabilities. Sweden’s Saab, a renowned defense and aerospace company, has received approval to establish “Saab FFV India,” a state-of-the-art facility dedicated to the production of components for the Carl-Gustaf M4 Weapon System. The FDI proposal, valued at just under INR 500 crore ($60 million), received the green light last month, marking a historic moment in India’s defense industry. Traditionally, defense sector investments in India have been limited to 74% FDI under the automatic route. However, this landmark approval for 100% FDI in the defense sector signifies a major shift, despite the sector’s relaxed clearance rules since 2015. The move highlights India’s commitment to attracting foreign investments and expanding its indigenous defense manufacturing capabilities.
The “Saab FFV India” facility is set to lead the way in manufacturing the latest iteration of the Carl-Gustaf M4 system, a versatile shoulder-fired rocket system that is already extensively used by the Indian armed forces. The proposed facility, expected to be located in Haryana, will be equipped with cutting-edge technologies, including advanced sighting systems and carbon fiber winding capabilities for the Carl-Gustaf M4 Weapon System. With local production, there is a significant potential for the Carl-Gustaf system to be exported to other countries, further boosting India’s defense exports. This venture marks a significant milestone for Saab as it establishes its first Carl-Gustaf M4 production line outside of Sweden. Manufacturing operations are scheduled to commence in the upcoming year, solidifying Saab’s commitment to contributing to India’s defense manufacturing capabilities and enhancing the self-reliance of the Indian armed forces.
In a similar vein, back in 2016, the French company DCNS sought approval for 100% FDI to establish an Indian subsidiary, DCNS India Pvt Ltd, with the aim of developing advanced technologies for submarines to enhance their underwater endurance. Despite its proposal to invest over INR 100 crore in India, DCNS did not receive the necessary clearances at that time, highlighting the significance of the recent approval for Saab. India’s decision to grant 100% FDI clearance to Saab is a testament to the country’s commitment to fostering partnerships with international defense firms, stimulating economic growth, and enhancing its defense manufacturing capabilities. This historic approval is expected to open doors for further collaborations, paving the way for a more robust and self-reliant Indian defense industry.
The Carl Gustaf Weapon System is a Swedish developed 84 mm (3.3 in) caliber man-portable shoulder-fired recoilless rifle, initially developed by the Royal Swedish Army Materiel Administration during the second half of the 1940s as a close-range anti-tank and support weapon for infantry, which has seen great export success around the globe and is today a popular multi-purpose support weapon in use by many nations. In U.S. military service, it is officially known as the M3 Multi-Role Anti-Armor Anti-Personnel Weapon System (MAAWS) or Ranger Antitank Weapon System (RAWS), but is often simply called the “M3 Carl Gustaf” or just “Gustaf”. Saab announced in September 2022 that it would establish a manufacturing facility to produce the Carl-Gustaf Carl-Gustaf M4 Weapon System in India. It will be the company’s first facility producing the M4 system outside Sweden. Previous versions of the Carl Gustaf system have been in service with India since 1976.