Antony against proposal to hike defence FDI to 49 percent

Defence Minister A.K. Antony has opposed moves to raise the Foreign Direct Investment (FDI) in defence manufacturing from 26 percent to 49 percent, and said that it will affect growth of domestic industry.

According to officials, Antony has written a letter to Union Commerce and Industry Minister Anand Sharma in which he has said that the Defence Ministry was of the view that the FDI in defence manufacturing sector should stay at 26 percent.

Antony, who has consistently pitched for growth of domestic defence industry, said that allowing foreign companies to set up manufacturing facilities will hamper growth of indigenous research and design development.

The Commerce Minister had written to Antony earlier in May, asking for the limit on foreign investment to be raised to 79 percent; he revised this to 49 percent in a subsequent note.

According to sources, a committee headed by Economic Affairs Secretary Arvind Mayaram had recommended that the FDI limit be raised to 49 percent in several sectors through automatic route.

The committee had suggested that the FDI in defence be raised to 49 percent under the government approval route from 26 percent at present.