Case for higher FDI in defence

OUR SPECIAL CORRESPONDENT

Anand Sharma in New Delhi on Wednesday. (PTI) New Delhi, April 3: Efforts are on to raise the FDI limit in the sensitive defence sector to 49 per cent from 26 per cent as the segment can provide an impetus to growth, which is forecast at just 5 per cent in the last fiscal. "I am in favour of raising FDI in defence to at least 49 per cent, if not 74 per cent, and this is what my department has recommended. An FDI of 26 per cent is definitely low. I recommended and will continue to strive for higher FDI in defence," commerce minister Anand Sharma said at the Confederation of Indian Industry's (CII) annual general meeting. According to Sharma, India has a huge potential in defence, one of the primary drivers of manufacturing in Europe and the US. The industry, he said, can grow in a close collaboration with the government. "There has to be a partnership between the government and industry." The commerce ministry had initially recommended raising the FDI limit to 74 per cent from 26 per cent. But the defence ministry opposed the move over security concerns. Industry associations such as the CII and Ficci are in favour of a smaller hike to 49 per cent as it will protect the interest of local players. Making a case for higher FDI, Sharma had written to the Prime Minister that "in the last decade, we have received only $4.12 million of FDI inflow in defence manufacturing is a clear testimony of this fact". At present, the domestic industry is allowed to fully participate in defence manufacture, but very limited orders are placed with them as they do not have access to high-end technology. The minister said the proposed national manufacturing investment zones would raise the share of manufacturing in the gross domestic product to 16-25 per cent within a decade and create 100 million jobs. Sharma said he expected applications on FDI in multi-brand retail to come before the government. "The policy was announced just a few months back. It takes time for investments to come in." So far, not a single proposal has been put before the government. He said France-based Auchan, one of the world's largest hypermarket chains, had plans to open 60 stores in India. Auchan's global chairman Vlanney Mulliez had yesterday called on Sharma. http://www.telegraphindia.com/1130404/jsp/business/story_16746038.jsp#.UV2GAxeBlA0