Govt for 74 pc FDI in defence to overcome obsolescence

NEW DELHI: With its weaponry facing rapid obsoletion, the government today

proposed to raise FDI in defence production to 74 per cent, saying it

would help ensure technology transfer and funds to effectively replace
imports, estimated at over $8 bn.

Mooting a discussion for raising FDI from 26 per cent in defence production to
the same level as telecom sector, the Industry Ministry also sought to allay
security concerns and impact on domestic players, saying effective checks
could be put to tackle any "suspect" company.

Leading industry chamber CII, which had earlier asked the government to limit
FDI to 49 per cent only, declined comments while no reaction could be
obtained from FICCI.

Another industry chamber Assocham said it is a strategic and sensitive sector

and opening up FDI from 26 per cent to 74 per cent straightaway "will not be a
prudent step".

Increasing FDI cap from 26 per cent to 49 per cent as advocated by some
industry associations "will not really help us in getting the best technology
partners to invest in India... (by this) we may be accused by posterity of doing
too little and too late," the discussion paper said.

"The established players in the defence industry should be encouraged to set

up manufacturing facilities... in India with FDI up to 74 per cent," it added