KV Prasad

Tribune News Service

New Delhi, June 20

The decision of the Narendra Modi government to bring in a minor change in the new FDI policy in defence could open it up for manufacturing and job creation, triggering immediate reaction from former Defence Minister AK Antony that the move could lead to Indian defence industry be controlled by NATO and American defence manufacturers.Tucked in the slew of sectors being opened up by the Centre today, it said while 49 per cent FDI participation in defence would remain under automatic route, beyond the cap “in cases resulting in access to modern technology in the country or for other reasons to be recorded, the condition of access to ‘state-of-the-art’ technology in the country has been done away with.”FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under the Arms Act, 1959, it was announced.The government’s move comes in the wake of repeated statements by foreign manufacturers seeking greater control and being less than enthusiastic at 49 per cent cap. By doing away with “state-of-the-art” clause, should give the government greater leeway in determining what modern technology the country is getting. At present, the sector attracted slightly above Rs 1 crore as FDI in last two years.For instance, there is an effort to speed up development of the long-delayed Light Combat Aircraft “Tejas”. The IAF has grudgingly accepted some 40 aircraft amid reports that talks are on with Swedish SAAB, which could gel with the programme since the next generation of LCA has to be qualitatively different. Recently, there were reports of Air Chief Arup Raha having test-flown one of the Swedish jets.“What the government has done is to make it easy for it to process FDI rather that resting on state-of-the-art technology. It opens up possibility of manufacturing and job creation,” Amit Cowshis, former Financial Adviser (Acquistion) in the Defence Ministry told The Tribune. He also said the larger issue of creating better eco-systems still hung fire with labour laws and land acquisition as cases in point.Meanwhile, Antony condemned the move and said it should be withdrawn in national interest. He said the move came immediately after PM Modi’s visit to the US.“The move poses a big threat to national security and India’s independent foreign policy. Allowing 100 per cent FDI means India’s defence sector is thrown mostly into the hands of NATO-American defence manufacturers. Naturally it will affect India’s independent foreign policy too. It will also threaten the national security,” he said.

What they said

• In the name of ‘Make in India’, the Modi government is ‘breaking India’. —Derek O’Brien, Trinamool Congress
• It is aimed at snatching away jobs from Indian people. It will spell a death knell for local businessmen. Opening sectors like retail, defence and pharma to FDI and by relaxing norms is ‘betrayal’ of people of the country. —Swadeshi Jagran Manch, RSS affiliate
• Allowing 100 per cent FDI in defence sector means it is thrown mostly into the hands of NATO-American defence manufacturers. Sweeping changes in the FDI policy posed a big threat to national security. Naturally, it will affect the India’s independent foreign policy too. —AK Antony, former Defence Minister