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Raise FDI in defence manufacturing to 49 percent: Assocham |
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Foreign direct investment (FDI) in defence manufacturing should be raised to 49 percent to enable the acquisition of the latest technologies from abroad, a leading industry chamber says.
The FDI cap of 26 percent in the defence production industry “should be increased to 49 percent as this would help in the procurement of latest technologies as per the provisions of the offsets policy”, Associated Chambers of Commerce and Industry of India (Assocham) president Venugopal N. Dhoot said on March 29.
His comments came on a paper titled “Indigenisation & Im¬port: Win-Win Situation” that the chamber has submitted to the government.
According to the paper, the Defence Offsets Facilitation Agency (DOFA) that is overseeing the implementation of the off¬sets policy “needs to be expanded and authorized to involve private sector participation in defence deals, based on feedback from the industry”.
India’s Defence Procurement Policy enunciated in 2006 man¬dates that 30 percent of all defence deals valued at over Rs.3 billion should be re-invested in the country.
“Since the new Defence Offsets Policy calls for greater private sector participation in defence purchases and procure¬ments, including imports, DOFA is the right body that can have parleys with Indian industry to strengthen and indigenise the defence sector,” says the paper that has been submitted to the government.
The DOFA should, therefore, “be empowered to regulate this sector by making suitable recommendations to the highest authori¬ties”, the paper adds.
With India’s arms imports expected to rise to $30 billion by 2012, DOFA and the armed forces, in consultation with India Inc, should conduct negotiations “so that defence imports are done qualitatively at much competitive rates”.
The offsets policy is expected to bring in $9 billion during the 11th Five Year Plan period (2007-12).
“If DOFA is conferred with the powers of a regulator, the FDI (Foreign Direct Investment) element in the defence sector would accelerate,” the paper says.
It states that as India has a large industrial base, “off¬sets will further develop its technical and manufacturing poten¬tial and they will also help to increase investments in domestic research and development.
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