Foreign A & D Majors Insist on Higher FDI Limit

FDI cap in Defence Sector is perceived lower by potential suitors. The upper limit prescribed for foreign companies to invest in JVs is 26 per cent. Echoing the view of industry bodies and foreign companies, the pre-budget economic survey this year suggested that FDI limit in defence industries be raised to 49 per cent from 26 per cent, and even allowed up to 100 per cent on a case-to-case basis, in high technology, strategic defence goods, services and systems that can help eliminate import dependence.

All this needs deliberations in wider national security interests, and NOT purely a business proposition.

Indian Defence Industry is very keen to forge JVs with foreign partners. For example, BEL is keen to forge JVs in the areas such as missiles, electro-optics and "portions of radars like radars for civilian areas". BEL is ready to work with potential partners either through a JV or some sort of arrangement like long-term partnership (not called a JV).

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Comments: MOD could always consider higher % of FDI limit on case-to-case basis for technologies extremely essential for India in next 4-5 years of time frame, with some 'special rider' on the JV company ownership and management.

Brigadier(Retired) Sukhwindar Singh
http://www.svipja.com/
(A Global Solution for Offsets)
Credit: USIBC News & Its Agencies.