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

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