by : Defense News
India's private sector defense industry has urged the government to raise the cap on Foreign Direct Investment (FDI) in the defense sector from the current level of 26 percent to 49 percent.
Even as the lobbying agency of the Indian private sector companies, the Associated Chambers of Commerce and Industry of India (ASSOCHAM), made this demand, Indian Defence Ministry sources said, the government is favorable to looking into increasing the FDI limit.
ASSOCHAM has sent a paper to the Defence Ministry explaining why it is necessary to increase the limit of FDI to 49 percent, said a senior executive of ASSOCHAM.
"That is the only way India can attain self-sufficiency in defense production, from the current position of being one of the highest importers of weaponry in the world," added the ASSOCHAM executive.
The Indian defense sector was opened to foreign and private sector players in 2001, but no major foreign investment has taken place except for some joint ventures and memorandums of understanding, mainly to meet the mandatory defense offset demands, said the Defence Ministry official. Increasing the FDI limit could spur overseas defense companies to join with Indian defense companies in a big way and help make India a defense production hub, added the Defence Ministry sources.
India is expected to spend about $30 billion in the next five years to meet the modernization and upgrade demands of the Indian military, and there is an offset market of around $10 billion that offers good opportunities for foreign companies to tie up with Indian companies.
India's private sector defense industry has urged the government to raise the cap on Foreign Direct Investment (FDI) in the defense sector from the current level of 26 percent to 49 percent.
Even as the lobbying agency of the Indian private sector companies, the Associated Chambers of Commerce and Industry of India (ASSOCHAM), made this demand, Indian Defence Ministry sources said, the government is favorable to looking into increasing the FDI limit.
ASSOCHAM has sent a paper to the Defence Ministry explaining why it is necessary to increase the limit of FDI to 49 percent, said a senior executive of ASSOCHAM.
"That is the only way India can attain self-sufficiency in defense production, from the current position of being one of the highest importers of weaponry in the world," added the ASSOCHAM executive.
The Indian defense sector was opened to foreign and private sector players in 2001, but no major foreign investment has taken place except for some joint ventures and memorandums of understanding, mainly to meet the mandatory defense offset demands, said the Defence Ministry official. Increasing the FDI limit could spur overseas defense companies to join with Indian defense companies in a big way and help make India a defense production hub, added the Defence Ministry sources.
India is expected to spend about $30 billion in the next five years to meet the modernization and upgrade demands of the Indian military, and there is an offset market of around $10 billion that offers good opportunities for foreign companies to tie up with Indian companies.