100 FDI in defence 8216;desirable8217;: Industry Ministry

The DIPP allayed concerns that the national security could be compromised by removing the ceiling on the FDI in the sensitive sector.

In any case,FDI would be subject to licensing provision. At present,26 per cent FDI is allowed in defence sector.

Since there is licensing provision in the defence sector we can refuse to permit FDI in the sector by refusing the licence where the background of the company is suspected,8221; the paper said.

Besides,the security concern can be met by imposing a condition that 8220;the government has a right to expropriate a manufacturing facility in case there is need to do so due to the exigencies of national security,by payment of suitabl compensation8221;.

Experts,however,have cautioned against the proposal

8220;Allowing 74 per cent FDI looks desirable in the non-strategic sector,the Industry Ministry will have to be cautious while allowing it in the strategic sector as foreign players will have control over these companies,8221; Observer Research Foundation ORF Senior Research Fellow and Defence Analyst Deba Mohanty said.