Tuesday, April 6, 2010

Govt mulls FDI hike in defence production: Sharma

The government today said it is weighing pros and cons of raising the FDI limit in defence production with a long-term objective of making India a major player in the sector. Confirming that "there are discussions" in this regard, Commerce and Industry Minister Anand Sharma at an Assocham function said here that the government is looking at the "long-term interest in ensuring that India has technologies and becomes a major manufacturing place(for Defence). He said before a decision is taken the "sensitivities" of the defence establishment would be taken on board. Different ministries, including the Ministry of Defence and the Ministry of Finance, the Department of Industrial Policy and Promotion as also the Planning Commission are debating the issue. India permits 26 per cent foreign direct investment (FDI) in the defence manufacturing, an area of growing interest for the domestic private sector, which is demanding 100 per cent FDI. Major industrial houses like Larsen and Toubro, the Tatas, the Mahindras and Punj Lloyds are already engaged into different defence-related businesses. Of the total defence allocations of Rs 1,47,344 crore for 2010-11, a large chunk of Rs 60,000 crore has been earmarked for capital expenditure. While the country has large domestic defence manufacturing base, mainly in the government sector, the government sources equipment worth Rs 30,000-35,000 crore for the world's second largest 1.5 million strong force.

Press Trust of India

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