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Panel wants FDI hike in defence production

Recommending increase in FDI in the defence production sector,a House panel has asked the Centre to consider a hike over the current 26 per cent

Written by Manu Pubby | New Delhi | Published: April 30, 2013 2:14 am

Recommending increase in FDI in the defence production sector,a House panel has asked the Centre to consider a hike over the current 26 per cent limit to bring in much needed investments for research and design and production of weapon systems.

The Parliamentary Standing Committee on Defence has urged the government to increase the FDI as it would ‘help in checking and mitigating the steadily expanding deficiency in defence modernisation’. The panel has brushed aside the Defence Ministry’s argument that an increase would lead to dependence on foreign vendors for critical requirements.

The panel,headed by Congress leader Raj Babbar,saw only two dissent notes on the recommendations,both from Left leaders. The panel,however,has not made clear the quantum of any proposed increase in the limit. The recommendation came despite the Defence Production Secretary contending that such an increase would ‘compromise the security aspects for the country’. The official said in case of an increase beyond 26 per cent,full transfer of technology would not take place to Indian partners and certain ‘proprietary technologies’ would ‘always be kept away’.

However,V K Saraswat,chief of the indigenous arms developer DRDO,claimed hike in FDI limit would bring more players and “increase the level of technology”. In his deposition to the panel,Saraswat said,“Improved FDI will bring in better participation of accomplished industries from abroad to work with our industries and increase the level of technology in the country.” He added that an increase would improve self-reliance but did not quantify the recommended increase in the cap.

Deferred payment due to financial crisis: MoD

The Defence ministry has said it had to defer payment for vital acquisitions such as aircraft and ships to tide over financial crisis in the last budget year but procurements did not stop as the vendors agreed to late payments. Describing how it managed a tight fiscal situation to the House committee on defence,a senior ministry official said payments were deferred to the next financial year after the Finance Ministry was constrained in providing the budget. ENS

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