Assocham Seeks Hike In FDI Cap In Defence (15-Aug-2010)
Industry body Assocham has urged the government to increase the foreign investment ceiling in the defence sector to 49% contending it as a must for growth of the domestic industry. The Assocham believes that such a move was mandatory to allow Indian players enter into meaningful technological collaborations with their foreign counterparts.
'The suggested move will allow a significant degree of control by Indian government on FDI inflow in defence and encourage domestic industry to seek meaningful foreign tie-ups,' said the Assocham.
Greater FDI into the sector will help to raise the overall knowledge pool in the industry and also help boost the domestic employments levels, stated the industry body. It wants the government to ensure that latest available technology is deployed in the defence industry, which can happen only if higher stake is offered to foreign players compared to the present cap of 26%.
Various Indian players operating in the defence space too have been saying that the foreign collaborators would have to be offered at least a reasonable share in a joint venture before they asking them to part with their cutting-edge technologies. The current limit was too low to provide an incentive to foreign companies to share the advanced technologies with their Indian partners.
The department of industrial policy and promotion (DIPP) had recently initiated a discussion for raising the FDI ceiling in the sector. Proposing a 74% FDI ceiling the department stated in its discussion paper that even 100% overseas investment in select cases would be desirable to take the Indian defence industry to next level.
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