FDI in Defence Sector

[sayareakd]

Wasn`t anthony against it.If yes then how come cabinet clears it

majority wins................ when it was put to vote in cabinate.

 

[anoop_mig25]

majority wins................ when it was put to vote in cabinate.

but then one is ignoring views of Minister of defence . it is his minister and his views should have highest piorirty .

Second thing what about collective leadership.

 

[Decklander]

Billions of dollars of bribe get paid to Khangrass in weapons deals and they have mastered this art. They will never let go of such a milking cow so easily. JVs will ensure that the bribes continue to flow in as the entire game will be in the hands of the foreign JV partner eventhough the weapons are made in India.

 

[SamwiseTheBrave]

for FDI in defence, its 26% via FIPB i.e goes through the clearance procedures and is the same thing being followed since the last decade. Anything above 26% i.e. between 27% and assuming upto 100% (the commerce minister categorically stated that he will NOT specify an upper limit, which is very intriguing !) has to go via CCS. Basically, the CCS now controls the fate of the yet unborn desi MIC. Seeing as to how elections are due in less than a year the chances of any big ticket defence investments happening are almost 0 ! who knows, the next govt. may even quietly drop this CCS clause as well ? bottom line is that the pvt. sector still has a window of opportunity to get its act together before its too late ! increased FDI does hamper self reliance in defence production and exposes other facets of national policy to manipulation by the invested parties

 

[mahesh]

any stock market advice ?

 

[Ray]

News Breaking on Headlines Today:

Cabinet clears 100% FDI in defence and Telecom. No change to Aviation.

@pmaitra @Ray @Kunal Biswas @The Messiah @sayareakd @Decklander

The Govt is desperate for money to fund Sonia Gandhi silly Food for Security that is inherent with total flaw and thoughtless populism.

Defence is the only area where foreigners will jump to since there is a guaranteed lucrative market!

 

[arnabmit]

Who knows... All things happen in the hallowed halls of South Block

Headlines Today said 100%, others are saying 49%

Wasn`t anthony against it.If yes then how come cabinet clears it

 

[Ray]

On some channel the bucktoothed Anand Sharma was rattling some figures that the Govt is organising for FDI.

This woman Sonia Gandhi will surely lead us to a greater gloom by pushing her Food for security that is ever so flawed and which these sycophants will do anything to ensure it takes off and lands us in human dung!

How can India with such high inflation including food price inflation, shockingly low GDP, Consumer Price Index, a shoddy PDS get stupid policies further burdening the common man?

Are populist and temporary gimmicks to hang on to power is the only thing that is to India and to do so sell India away mindlessly?

 

[SPIEZ]

Today it is FDI in defence next will be dilution of 30% offset clause. Most likely Khangrass will change the rules to include investment in JVs as part of Offset clause which will ensure that Indians get nothing and the foreign firms have the last laugh.

As such they already have the last laugh. There is no development or encouragement for local platform neither by local defense forces nor the government. The INSAS is a case in point.

 

[SPIEZ]

My two cents on the issue.

1) Separate Public Sector Companies (Separate the various labs within the DRDO)
2) Stop funding all delayed projects
3) Stop projects where the scope of the deliverables are not reasonable
4) Make it mandatory for Indian companies to compete with a foreign company for certain feasible defense projects (Like assault rifles, trucks, so on and so forth)
5) Promotions based on deliverables for the employees
6) Funding for each organisation should also be based on deliverables.

One must not forget the success of Public Sector companies like ISRO.

 

[Dovah]

5) Promotions based on deliverables for the employees
6) Funding for each organisation should also be based on deliverables.

Govt. employees will riot. Truestoraay.

 

[W.G.Ewald]

Indian rupee, markets draw cold comfort from relaxed FDI rules | Reuters

India's relaxation of foreign investment rules, aimed at drawing funds needed to turn around slowing economic growth and support a crumbling rupee, barely lifted markets on Wednesday due to doubts whether long-term inflows would materialize anytime soon.

Prime Minister Manmohan Singh eased FDI rules late on Tuesday for several industries, including insurance and telecoms, although some of the liberalization measures fell short of expectations or came with caveats.

The long-pending move to increase the foreign direct investment (FDI) cap in insurance from 26 to 49 percent, for example, still needs approval from parliament, where a bill has been stuck for months.

 

[W.G.Ewald]

FDI reforms: The US must now act its part out

It shouldn't but it always takes an alarm to wake up the government of India. The Americans rang one loudly, the rupee was slipping badly and the FDI flows were drying fast, that even the UPA couldn't ignore the economic mess anymore.

The timing of the new measures on raising FDI caps, including in the "holy cow" sectors of defence and insurance is significant. The announcement came three days after three top UPA ministers returned from Washington where they met a range of US corporates and officials with a long list of complaints.

Prime Minister Manmohan Singh ostensibly acted on the recommendations of the Mayaram Committee. But the sudden energy to implement a report perhaps came with the realization that a weight-bearing pillar of Indo-US relations needed major repairs – the American business community. US companies needed to be reassured that the India story continues.

 

[W.G.Ewald]

Indian Stocks Rebound From Biggest 2-Week Decline on FDI Reforms - Bloomberg

Indian (SENSEX) stocks rebounded from the biggest decline in two weeks after the government approved plans to liberalize foreign investment rules to boost growth.

The S&P BSE Sensex advanced 0.4 percent to 19,926.55 at 9:29 a.m. in Mumbai, after falling the most since July 3 yesterday. Engineering company Larsen & Toubro Ltd. (LT) advanced 1.3 percent. Cigarette maker ITC Ltd. (ITC), which has the highest weightage on the index, surged to a record.

Reforms approved yesterday will allow overseas investors to own all of an Indian telephone company, and increase the 26 percent limit in defense production on a case-by-case basis. The government has been reviewing caps on foreign investment as it strives to lure funds to help spur a struggling economy and finance a current-account deficit that helped push the rupee to a record low this month.

 

[W.G.Ewald]

Govt unleashes big-bang FDI reforms, opens up defence - The Times of India

Faced with a harsh economic environment, the government on Tuesday opened the doors to greater foreign investment in almost a dozen sectors, including telecom and the tightly-policed defence, for "state-of-the-art" technology.


Prime Minister Manmohan Singh moved in to iron out differences between various wings of the government to push through the fresh round of opening up to boost dwindling confidence in the Indian economy. Apart from telecom and defence, there were two segments of the financial sector - asset reconstruction companies and credit information bureaus - where the FDI ceiling was raised.

 

[Dovah]

What India loses by capping FDI in defence

The FDI cap in defence will remain at 26% and proposals beyond that will be considered by the Cabinet Committee on Security (CCS) on case to case basis, according to a government decision which showed that defence ministry prevailed over the commerce ministry.

Despite clamours for increasing the FDI cap to 49 percent, the government has not budged. The rationale? An increase in the FDI cap is based on the assumption that higher investment would impinge upon national security, ruin domestic technological development and destroy the nascent indigenous industry.

"FDI cap is 26% in defence sector, that stands like that. Any FDI proposal beyond 26% which brings state-of-the-art technology, that proposal would be considered by the CCS," commerce minister Anand Sharma said yesterday.

And here lies the devil. The definition of state-of-the-art technology would be determined by the defence ministry, he said.

State-of-the art needs to be defined carefully, but going by the government's track record this is unlikely due to lack of clarity on the policy front.

India's Defence Minister A.K. AntonyIndia's Defence Minister A.K. Antony
A research paper by Amit Cowshish from the Institute for Defence Studies and Analyses asks a pertinent question.

Would the ministry of defence relax the FDI cap if the foreign vendor wants to set up a wholly owned subsidiary for absorbing the technology?

For defence minister AK Antont reducing dependence on foreign players is imperative to control corruption. As this Firstpost article noted earlier, allowing more FDI in defence beyond 26 percent on a "case-by-case" basis just implies more scope for bribery.

Between 2012 and 2020, India is expected to spend $150 billion to replace its outdated equipment and expand its military. By capping the limit the government is not only preventing foreign companies from sharing technologies with local partners but also allowing PSU defence companies an advantage over private players.

According to Cowshish, FDI in defence will not only bring capital, but also technology, skilled manpower, and employment since it will allow the transfer of resources that are required to kick start indigenous green field research, design and development projects.

S N Misra, senior officer in the Ministry of Defence, Government of India, in a column last year had pointed out that the total inflow of resources to the defence industry between April 2000 and May 2010 amounted to a meagre $ 0.15 million, a fraction of the inflow into sectors that attract high-value FDI, namely services, computer software and hardware, and telecommunications, among others.

In fact, India is tipped to become the world's third-largest defence spender after the US and China by next year, and equipment spending is reckoned to be $80-100 billion in the next 5 years. But without tweaking the FDI norms large foreign suppliers of defence equipment will not be interested in putting up supply bases in India.

Will indigenisation be fast enough for India to achieve its defence needs internally at a time when the country is anyway importing most of its defence needs?

"The allocation for capital acquisitions had been growing significantly in the last ten to fifteen years, opening up good opportunities for the Indian private industry but there have not been many significant indigenous breakthroughs in research, design and development of new equipment and weapon systems. In fact, India has now become the largest importer of the defence wares. This suggests that either the industry does not have the financial capacity to invest in research, design and development or it has the capital but it is unwilling to invest because of some other reasons," argues Cowshish

Seems like Antony got his way. Plus, does this in any way encourage corruption?

 

[W.G.Ewald]

Antony, Sharma agree on status quo in Defence - The New Indian Express

Prime Minister Manmohan Singh's persistence to get Union Defence Minister A K Antony and Commerce and Industry Minister Anand Sharma to arrive at a consensus on the foreign direct investment (FDI) in the defence sector has paid off, with the two senior ministers agreeing to maintain the status quo of 26 per cent cap in foreign investments in the sector.

 

[kseeker]

Govt moves to hike defence FDI up to 100% - The Times of India

NEW DELHI: Within two days of taking charge, the Narendra Modi government has begun work on allowing up to 100% foreign investment in defence production, in a bid to send a strong signal to global investors as well as to try and move the production base of some equipment into the country.

The commerce and industry ministry has circulated a Cabinet note seeking comments from other government agencies, sources familiar with the development told TOI.

The ministry is also readying other proposals to allow FDI in sectors such as railways, where the list of areas where investment will be allowed is being expanded, according to sources. Earlier, the government had planned to allow FDI in high-speed train systems, suburban corridors, high-speed tracks and freight lines connecting ports and mines. Similarly, there is a proposal to ease FDI norms in construction.

On Tuesday, Arun Jaitley had spoken of the government's intent to hike the FDI cap in the sector to 100% from 26% at present — a move that has been resisted by the defence ministry for years.

With Jaitley holding both the finance and defence portfolios, opposition may be muted this time. In any case, during his election campaign Prime Minister Narendra Modi had announced his support for greater private participation in the defence sector.

The commerce & industry ministry has suggested a graded foreign investment ceiling. It has suggested a cap of 49% FDI for companies that do not transfer technology, while in ventures where the foreign partner is willing to transfer knowhow, the government intends to allow up to 74% FDI, and there will be no cap (100% FDI) for companies engaged in manufacturing state-of-the art equipment and machinery or those undertaking modernization projects.

The cap on foreign investment will include funds routed through FDI, portfolio flows (FII) and investment by non-resident Indians, said a source, who did not wish to be identified. To ensure security compliance, sources said, all proposals will be routed through the Foreign Investment Promotion Board (FIPB) which has representatives from the home ministry and other security agencies.
While the UPA government too had said that the FDI cap in defence would be raised there was no actual movement on the ground and the rules remained vague.

On May 23, TOI had reported that the department of industrial policy and promotion (DIPP) in the commerce & industry ministry is ready with proposals to ease the FDI rules for defence, railways and e-commerce.

The government is keen to ease foreign investment rules to send a signal to global industry that it is truly open for business now.

Times View

This paper wholeheartedly endorses Prime Minister Modi's priorities: education, health, water, energy and roads; promoting transparency through e-auctions; infrastructure and investment reforms; empowering the bureaucracy; people-centric governance; stable, consistent policies and their time-bound implementation. We have, in innumerable Times Views over the years, sought exactly the same things from government. Converting vision into practice won't be easy, but the first few days of this government give us hope.

 

[cobra commando]

Boost public-private
partnerships in Indian
industry to make the most out of FDI in Defence

Last October India's flagship 'make' (high-tech systems) program under the Defence Procurement Procedure (DPP) -2011, the Tactical Communication System (TCS), finally got some momentum going when the Ministry of Defence (MOD) issued staff qualitative requirements to the previously down-selected competitors for this program. Though long overdue, forward movement on TCS marks the beginning of an era wherein synergistic public-private models will be pursued towards furthering indigenisation. For instance under the 'make' category, 80 percent of the cost of development and prototyping will be borne by the MOD while the remainder is to be put up by the developing agency (DA). Incidentally, over 150 new projects under the 'make' category are going be rolled out this year in order to both defray risks as well as augment capabilities. Other initiatives that include the sharing of government held intellectual property with private companies in order to raise their technological base and thereby free DRDO to focus more on cutting edge developments are also on the anvil. If these measures are pursued doggedly, a quantum jump in the size and quality of India's domestic military-industrial complex can be achieved before the end of the decade itself.


Read more here:
Saurav Jha's Blog : Boost public-private partnerships in Indian industry to make the most out of FDI in Defence

 

[abhi_the _gr8_maratha]

With No War in-sight , American Companies Closely watching Increase of FDI in Indian Defence sector | idrw.org