Thaindian News

New Delhi, May 17 (IANS) The foreign investment cap in the defence manufacturing sector should be raised to 74 percent, from the existing 26 percent, to encourage established players enter the field, a working paper circulated by the commerce and industry ministry says.
“The established players in the defence industry should be encouraged to set up manufacturing facilities and integration of systems in India with FDI (foreign direct investment) up to 74 percent under the government route,” says the paper, circulated among different stakeholders in the field for their views and suggestions.

It also says that there “need not be any commitment” on procurement by the armed forces of the equipment manufactured by these players, who will “have to participate” in any requests for proposals (RFPs) to technically qualify for a bid and also compete in the financial bid.

This apart, the paper suggests that in future defence ministry RFPs, a condition may be imposed that the successful bidder would have to set up systems integration facility in India “with a certain minimum percentage of value addition in India”.

The paper also has a caveat: “The views expressed in this discussion paper should not be construed as the views of the government. The department (of industrial policy and promotion that has generated it) hopes to generate informed discussion on the subject, so as to enable the government to take an appropriate policy decision at an appropriate time.