No faith in make in defence
By Pradip R Sagar | Published: 29th July 2017 10:18 PM |
NEW DELHI: In spite of the Make in India drive, NITI Aayog has shown lack of confidence in India’s defence equipment manufacturers. In a proposal sent to the Prime Minister’s Office and Department of Industrial Policy & Promotion, CEO Amitabh Kant has recommended 100 per cent foreign direct investment (FDI) in defence manufacturing. Apart from total investment in technology, the panel recommends foreign companies be allowed to fully produce battle tanks, military transport aircraft and armoured vehicles using the automatic route, where at present there is no expertise or technology available in the country.
Under this rule, a foreign firm is not required to obtain government approval for investing in public sector. Kant’s note has gained significance in the backdrop of border tensions with Pakistan and China, and the new Indian doctrine of a ‘short and intense war’. The note was sent even before the Comptroller and Auditor General’s unfavourable assessment of the Indian Air Force’s (IAF) capability to meet the Chinese threat was made public.
The defence sector has gained little from global players, who have not expressed enough interest in the easing of FDI norms from 49 per cent to 76 per cent last year. As per official records, just rs 61,000 crore of FDI came in between July 2016 and January 2017, post the revision. Currently, 76 per cent FDI is allowed under the automatic route for producing fighter aircraft and helicopters.
For submarines and warships, it’s 51 per cent. NITI Aayog recommends this ceiling be raised to 100 percent in producing armoured vehicles, battle tanks and military transport vehicles. Kant’s note states that there is ‘no capacity within the country to make heavy complicated all terrain vehicles’. NITI Aayog believes that the large global demand of tanks and armoured vehicles has potential to make India a global manufacturing hub.
While recommending 100 per cent FDI in the manufacturing of state-of-the-art fighter aircraft, the proposal pointed out the IAF’s demand for over 500 fighter jets in 15 years. The NITI Aayog note also moots 100 per cent FDI in the manufacturing of infantry weapons such as rifles, carbines, revolvers and machine guns. Indian Army has been battling to replace its assault rifles for the last two decades.
“Opening up defence sector up to 100 per cent clearly indicates that the government is in no mood to wait for defence products. Unless there is large-scale FDI entering the Indian defence market, there will be no real transfer of technology,” explained an officer, privy to the development.