Radical decision on FDI cap urgent
The debate on increasing foreign direct investment (FDI) in defence has been on for quite some years. In the previous UPA Government, the FDI cap was at 26 per cent. That did not bring in the kind of investments that was anticipated. There were continuous exhortations from the industry, the original equipment manufacturers (OEMs) and defence experts that the FDI level had to be increased.
The new Narendra Modi Government took a decision to increase the FDI to 49 per cent, but if an OEMs is going to invest 49 per cent and still has no control over the project, the OEM is better off with 26 per cent. The less the investment, the less is the risk.
In this issue, we have industry captains and defence analysts making a case for increase in the limit of FDI. In his frank and forthright views, Lt General P.C. Katoch (Retd) argues that FDI is the route to indigenisation and keeping this in mind, it would be appropriate if the government goes beyond the 50 per cent level, of course, with checks and balances. If India has to get the best of technologies, then it needs to take quick, transparent and radical decisions.
Prime Minister, Narendra Modi, while addressing armed forces personnel in Leh, promised to equip them with the most modern of equipment. Around the same time, the Defence Acquisition Council (DAC) gave clearance to make high-tech defence products in India which includes systems and platforms from light utility helicopters to Arjun Tanks. In the same week, INS Kolkata and INS Kamorta, which are going to add to the marine combat capabilities, were dedicated to the Indian Navy. Analysing India’s marine capability, Ranjeet Kumar acknowledges the capabilities of the Indian shipbuilding industry.
In SP’s Exclusives, we look at the light combat aircraft (LCA) project. The Aeronautical Development Agency (ADA) has been told clearly that the future of squadron numbers depends largely on the LCA Mk.2. In fact, the Prime Minister recently exhorted the Defence Research and Development Organisation (DRDO) to complete projects in time. Meanwhile, India and Russia will soon sign the $11-billion contract for the crucial experimental design phase of the fifth-generation fighter aircraft (FGFA) programme.
SP’s M.A.I. will keep you updated on the developments in defence and internal security and we look forward to your feedback to help us improve further.
SP Guide Publications’ Publisher and Editor-in-Chief Mr Jayant Baranwal presents SP’s Military Yearbook 2014-2015 (an annual feature since 1965) to Mr Inderjit Singh Rao, Minister of State for Defence, India.
Jayant Baranwal Publisher & Editor-in-Chief