Industry ministry proposes 74 per cent FDI in defence sector

The industry ministry on Monday proposed a hike in foreign direct investment of up to 74 per cent in the country's defence sector from the current 26 per cent, in order to effect an urgent upgrade of equipment in the armed forces.

This is being sought to be done with a view to upgrade the weaponry with the defence forces, the bulk of which is obsolete.

According to the Department of Industrial Policy and Promotion, the hike in FDI need not necessarily mean any commitment on procuring from companies, which have set up facilities in India.

"There need not be any commitment on procurement and these players will have to participate in the Request for Proposal to technically qualify and also compete in the financial bid," DIPP said in a discussion paper.

It has sought views from different stakeholders till 31 July this year.

The DIPP said that only 15 per cent of India's defence equipment could be described as state-of-art and nearly 50 per cent was suffering from obsolescence. There was an urgent need to enhance the deterrent and the operational capabilities of the armed forces, it added.

With the entire issue in the public domain, the DIPP has clarified that the suggested policy should not be construed as the firm views of the government.