thestringshredder
FULL MEMBER
- Joined
- Jun 24, 2012
- Messages
- 1,254
- Reaction score
- 1
- Country
- Location
In 13 years, India got only $4.94 million as defence FDI
NEW DELHI: India remains the world's largest arms importer, having failed to develop a strong defence industrial base (DIB) despite all the tall talk since the 1999 Kargil conflict. Here is the latest shocker: the country has attracted a grand total of $4.94 million as foreign direct investment (FDI) in the defence production sector over the last 13 years.
To put this measly sum in perspective, it is important to note that India inked arms deals worth $50 billion in the decade after the 1999 Kargil conflict mainly with foreign armament majors and is zooming ahead to spend almost triple that amount in the current decade.
It was well-known that India was floundering to draw FDI, much like it was failing to ensure the domestic private sector joined the defence production arena in a big way. With the defence ministry also refraining from undertaking systemic reforms to revitalize DRDO, five defence PSUs, four shipyards and 50 Ordnance Factories, the armed forces have no choice but to import over 60% of their military hardware and software for the foreseeable future.
On Monday, responding to a written question in the Lok Sabha, minister of state for defence Jitendra Singh disclosed, "FDI amounting to Rs 24.36 crore ($4.94 million) has been received in the defence industry sector from April 2000 to April 2013."
"The data regarding investment made by Indian private sector firms is not maintained. Sixty-three applications have been received for industrial licenses for manufacture of defence items from private companies in 2012-2013," he added. Sources, however, said a bulk of the around 200 letters of intent (LoIs) or manufacturing licences issued till now are yet to materialise on the ground.
This comes just a few days after defence minister A K Antony, once again, successfully torpedoed commerce minister Anand Sharma's bid to lift the existing 26% FDI cap in the defence sector. The ostensible sweetener was that the Cabinet Committee on Security (CCS) would consider FDI proposals beyond 26%, which brings "state-of-the art" technology, on a "case-to-case" basis.
But critics say this has been the MoD's "stated position" for the last several years without actually being implemented. They argue greater FDI will bring in capital, high-end technology, and better quality and management skills in the defence sector.
A robust DIB, even with higher FDI, in India will reduce its current strategic vulnerability in being so overwhelmingly dependent on imports. "If we are buying so heavily from foreign arms vendors, why not get them to set up factories here in joint ventures? They are reluctant to come in with a 26% cap" said an expert.
Antony, however, is not impressed. He is steadfast that the 26% FDI cap in the "sensitive and strategic"' defence sector is more than enough at present. The endeavour, instead, is to push genuine indigenisation in the defence production sector, with greater private sector participation. This will, feels Antony, also help weeding out all-pervasive corruption in arms deals.
But it will take a lot of doing, given the track-record. India has lagged far behind China in developing a strong DIB despite the defence sector being opened up 100% for the Indian private sector, with FDI up to 26%, way back in May, 2001. Till then, the sector was largely the preserve of the public sector.
Over the last couple of years, the commerce ministry's department of industrial promotion and policy has even proposed the FDI limit in the defence sector be hiked to as much as 74%. Even the Economic Survey has also called for the FDI limit to be raised to 49%, with even 100% being allowed in a case-by-case basis. But to no avail till now.
Link - In 13 years, India got only $4.94 million as defence FDI - The Times of India
NEW DELHI: India remains the world's largest arms importer, having failed to develop a strong defence industrial base (DIB) despite all the tall talk since the 1999 Kargil conflict. Here is the latest shocker: the country has attracted a grand total of $4.94 million as foreign direct investment (FDI) in the defence production sector over the last 13 years.
To put this measly sum in perspective, it is important to note that India inked arms deals worth $50 billion in the decade after the 1999 Kargil conflict mainly with foreign armament majors and is zooming ahead to spend almost triple that amount in the current decade.
It was well-known that India was floundering to draw FDI, much like it was failing to ensure the domestic private sector joined the defence production arena in a big way. With the defence ministry also refraining from undertaking systemic reforms to revitalize DRDO, five defence PSUs, four shipyards and 50 Ordnance Factories, the armed forces have no choice but to import over 60% of their military hardware and software for the foreseeable future.
On Monday, responding to a written question in the Lok Sabha, minister of state for defence Jitendra Singh disclosed, "FDI amounting to Rs 24.36 crore ($4.94 million) has been received in the defence industry sector from April 2000 to April 2013."
"The data regarding investment made by Indian private sector firms is not maintained. Sixty-three applications have been received for industrial licenses for manufacture of defence items from private companies in 2012-2013," he added. Sources, however, said a bulk of the around 200 letters of intent (LoIs) or manufacturing licences issued till now are yet to materialise on the ground.
This comes just a few days after defence minister A K Antony, once again, successfully torpedoed commerce minister Anand Sharma's bid to lift the existing 26% FDI cap in the defence sector. The ostensible sweetener was that the Cabinet Committee on Security (CCS) would consider FDI proposals beyond 26%, which brings "state-of-the art" technology, on a "case-to-case" basis.
But critics say this has been the MoD's "stated position" for the last several years without actually being implemented. They argue greater FDI will bring in capital, high-end technology, and better quality and management skills in the defence sector.
A robust DIB, even with higher FDI, in India will reduce its current strategic vulnerability in being so overwhelmingly dependent on imports. "If we are buying so heavily from foreign arms vendors, why not get them to set up factories here in joint ventures? They are reluctant to come in with a 26% cap" said an expert.
Antony, however, is not impressed. He is steadfast that the 26% FDI cap in the "sensitive and strategic"' defence sector is more than enough at present. The endeavour, instead, is to push genuine indigenisation in the defence production sector, with greater private sector participation. This will, feels Antony, also help weeding out all-pervasive corruption in arms deals.
But it will take a lot of doing, given the track-record. India has lagged far behind China in developing a strong DIB despite the defence sector being opened up 100% for the Indian private sector, with FDI up to 26%, way back in May, 2001. Till then, the sector was largely the preserve of the public sector.
Over the last couple of years, the commerce ministry's department of industrial promotion and policy has even proposed the FDI limit in the defence sector be hiked to as much as 74%. Even the Economic Survey has also called for the FDI limit to be raised to 49%, with even 100% being allowed in a case-by-case basis. But to no avail till now.
Link - In 13 years, India got only $4.94 million as defence FDI - The Times of India
