<p>This follows the Economic Survey for 2008-09 tabled in parliament July 2 that said that 100 percent foreign direct investment (FDI) should be permitted for high-technology defence equipment.<br />"Even though the suggestion in the Economic Survey has little legal implications, it has indicated a marked favour among the defence planners for an increase in the FDI limit. A notification in this regard is to be expected by the end of this year," a senior defence ministry official told IANS on condition of anonymity. <br />Experts say the current level of FDI at 26 percent restricts companies from investing due to the limited economic returns.<br /><br />"Despite opening up its defence sector for private participation in 2001, there has not been any major capability enhancement in the private sector," the official added.<br />According to industry sources, the government has targeted 2010 to achieve 70 percent procurement of defence items from indigenous sources.<br />For achieving this target, the government is mainly relying on private players. The increase in the FDI limit would help in this respect.<br /><br />A vibrant defence industrial sector would enhance security of supply and upgradation of products within India's industrial base and secure supply of arms and ammunition.<br />Also, an increase in the FDI limit would help private defence firms compete in a level-playing field with the public sector undertakings.<br /><br />The hike in the FDI limit would give an impetus to private players as India's expenditure on importing arms, which soared to $25 billion (Rs.1 trillion) since the Kargil war of 1999, is estimated to reach $30 billion by 2012.<br />Moreover, the defence offsets policy is expected to bring in $10 billion during the 11th Five-Year Plan (2007-12).<br />Every foreign firm involved in India's defence deals is required to reinvest in India 30 percent of the value of goods or services provided.</p>
<p>This follows the Economic Survey for 2008-09 tabled in parliament July 2 that said that 100 percent foreign direct investment (FDI) should be permitted for high-technology defence equipment.<br />"Even though the suggestion in the Economic Survey has little legal implications, it has indicated a marked favour among the defence planners for an increase in the FDI limit. A notification in this regard is to be expected by the end of this year," a senior defence ministry official told IANS on condition of anonymity. <br />Experts say the current level of FDI at 26 percent restricts companies from investing due to the limited economic returns.<br /><br />"Despite opening up its defence sector for private participation in 2001, there has not been any major capability enhancement in the private sector," the official added.<br />According to industry sources, the government has targeted 2010 to achieve 70 percent procurement of defence items from indigenous sources.<br />For achieving this target, the government is mainly relying on private players. The increase in the FDI limit would help in this respect.<br /><br />A vibrant defence industrial sector would enhance security of supply and upgradation of products within India's industrial base and secure supply of arms and ammunition.<br />Also, an increase in the FDI limit would help private defence firms compete in a level-playing field with the public sector undertakings.<br /><br />The hike in the FDI limit would give an impetus to private players as India's expenditure on importing arms, which soared to $25 billion (Rs.1 trillion) since the Kargil war of 1999, is estimated to reach $30 billion by 2012.<br />Moreover, the defence offsets policy is expected to bring in $10 billion during the 11th Five-Year Plan (2007-12).<br />Every foreign firm involved in India's defence deals is required to reinvest in India 30 percent of the value of goods or services provided.</p>