Defence Ministry to continue with 26 per cent FDI

Antony, however, said his Ministry would consider a higher limit "on a case-to-case basis"."At the moment it (policy on FDI in Defence) is 26 per cent. Our Defence Production Policy (DPP) is evolving over the years...But at the moment we feel Indian defence sector is not matured enough...not ready to absorb more FDI in defence sector. We feel that time is not right to further expand it," Antony told reporters after addressing Navy Commanders here.

Initially, the Defence Minister said, the Public Sector Undertakings had 100 per cent monopoly in the defence sector. But the policy was changed this decade to first allow 100 per cent private participation and later 26 per cent FDI.Notwithstanding the 26 per cent FDI policy, he said, "Ultimately, forever I can not rule out (higher FDI).

"On a case-to-case basis, we will allow more FDI in defence sector," he added.
Antony was asked what he thought of the Commerce Ministry's suggestion to hike the FDI in defence sector to 74 per cent from the existing 26 per cent.

Commerce Ministry's Department of Industrial Policy and Promotion (DIPP) had in its discussion paper called for allowing 74 per cent FDI in the defence sector.
The foreign players in the defence sector have been making a forceful plea for a hike in the FDI limit, eyeing the over USD 50 billion Indian defence spending expected over the next five years.

There have been varying demands, both from foreign and domestic firms, for increasing the FDI limits -- some calling for 49 per cent, some 74 per cent and still others 100 per cent FDI.

Another section, particularly from the domestic industry, want the government to continue with the existing 26 per cent FDI limit."Commerce Ministry has brought out a discussion paper only. The Commerce Minister himself said it is a discussion paper. We can discuss. There is no problem. You should not think there is a clash (between the two ministries)," Antony said.

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