Raise FDI cap in defence to 49%: US firms

The US India Business Council (USIBC), an advocacy group representing American companies doing business in India, has asked Prime Minister Manmohan Singh to increase the cap of Foreign Direct Investment (FDI) in the defense sector to 49 per cent.

The USIBC, which had successfully lobbied for the nuclear deal at the Congress, had also pushed for End Use Monitoring agreement between the two countries which was reached during Secretary of State Hillary Clinton's visit to India.

"While successful completion of EUM negotiations is a positive step in the right direction, USIBC is aware that more still needs to be done in this important sector," the USIBC said in a statement.

"On the top of USIBC's agenda is raising the FDI cap in defense to 49 per cent and successfully refining India's defense offset requirements so US firms can provide full value to India's goal of modernizing defense production and building out India's prowess in defense manufacturing," the USIBC said.

Signing of the EUM agreement is a significant step that puts decades of Cold War baggage behind the world's two largest democracies, the US and India have achieved consensus on a key bilateral agreement that promises to bolster the US and India as reliable partners for the long future in sensitive areas of defense and security trade, it said.