New Delhi: The Government has decided to keep the FDI cap in defence sector unchanged at 26 percent and all proposals beyond that on ‘state-of-the-art technology’ will be considered by the Cabinet Committee on Security. It should be mentioned here that Defence Minister AK Antony had earlier vouched for no change in FDI limits in defence sector and the Government’s decision shows that Defence Ministry prevailed over the Commerce Ministry.
"FDI cap is 26 percent in the defence sector and it stands like that. Any FDI proposal beyond 26 percent which brings state-of-the-art technology, would be considered by the CCS," Commerce Minister Anand Sharma said.
The Commerce Minister was addressing a press conference on decisions taken by a meeting headed by Prime Minister Manmohan Singh on FDI in different sectors. The definition of state-of-the-art technology would be determined by the Defence Ministry, he said. Commenting on the decision, Defence Ministry officials said that depending on the quality of the technology on offer, the CCS will take a call on the proposals for FDI in defence sector.
The decision is on the lines of the assertion by AK Antony, who recently wrote to Anand Sharma, opposing any move to raise the cap to 49 percent. Overruling the Commerce Ministry's proposal, Antony had said, "The deliberated view of the Defence Ministry remains that the FDI cap in the defence manufacturing sector should remain at 26 percent."
At the same time, he had said that whenever FDI beyond 26 percent ‘is likely to result in access to modern and state-of-the-art technology in the country, decisions can be taken to allow higher FDI on a case to case basis by the Cabinet Committee on Security.’
Opposing that proposal, Antony had said that it will be a ‘retrograde’ step and ‘stymie’ the growth of the domestic industry while increasing dependence on foreign manufacturers.


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