Allow 100% FDI in defence sector, says Assocham

The government should allow 100% FDI in defence sector so that the country can become self-reliant in production and encourage technology transfers, industry body Assocham has said.

At present, India imports about 70% of its defence requirements

"We must recognise that defence production is a capital and technology intensive-sector. To develop a strong industrial base in the country, we need foreign capital and technology," Assocham said.

Currently, 26% Foreign Direct Investment (FDI) is allowed in the sector.

India can acquire self-reliance in defence production with raising FDI ceiling to 100%, the chamber said.

"The present cap on FDI in the sector has kept away both investments and technology transfer. There is no reason why we should not allow 100% foreign investment in defence sector," Assocham Secretary General DS Rawat.

FDI along with usage of advanced technology is a better option for manufacturing defence equipment domestically rather than importing them from abroad, he added.