Sharma for FDI cap hike in defence

Commerce and Industry Minister Anand Sharma on Friday favoured a hike in FDI cap for the defence sector and assured global investors that policy on multi-brand retail would not be reversed.

"I would like to see higher FDI in defence. India is the biggest defence equipment purchaser in the world and there is a huge outgo of foreign exchange which we badly need," Sharma said at a function.

However, he said there are some "sensitivities and complexities" in the defence sector. Currently, FDI of up to 26 per cent is permitted in the defence sector.

The minister said that India can become a defence manufacturing hub of the world.He also assured global investors that the foreign direct investment policy in the multi-brand retail trading would not be reversed.

"...there is reassurance. Where parliament has voted, where Supreme Court has endorsed it, you still have more learned leaders who say if we come to power, we will reverse that action knowing that nobody can reverse (the decision)," he said.

Global retailers like Walmart and Tesco have sought assurance from India that any change of governments at both centre and states should not result in reversal of FDI policy in multi-brand segment, before taking investment decisions in the country.

“We have taken decisions and the moment we take decision, it gets trapped in partisan politics,” he said.

On the recent proposal of the Finance ministry which has suggested sweeping changes in the FDI regime, Sharma said, “I do not think that just by opening all doors and windows, we are going to fix the problem of the Indian economy and overnight you will have room flooded with foreign capital and everything will be good.”

He expressed concern over high cost of borrowing and said that it impacts competitiveness of Indian products and manufacturing sector in the country.