FDI beyond 26% in insurance isn't in the national interest: S Gurumurthy

Interview with 'Swadeshi' advocate and Rashtriya Swayamsevak Sangh advisor

S Gurumurthy, long known for his advocacy of  ‘swadeshi’ economics and known to provide intellectual advice for the Rashtriya Swayamsevak Sangh, speaks to Sanjay Jog on the government’s move to raise the cap on foreign direct investment (FDI) in the insurance abd defence sectors to 49 per cent. Edited excerpts:

What is your reaction to the government's decisions to raise the FDI limit in the defence and insurance sectors?

I think the government has done the right thing to invite 49 per cent FDI in the defence sector, with full Indian management control. India is buying arms from foreign countries and from foreign government companies. Instead of paying the full price of the equipment, the country will be manufacturing it here, in collaboration with the foreign investor plus technology supplier. Our defence needs would be fulfilled and local manufacturing capacity will be established, without reliance on an outside source of supply. By the way, I have never opposed a non-controlling FDI in defence. I think in this sector, the time is ripe.

But its decision to raise FDI in insurance sector to 49 per cent is not correct. If insurance companies are in distress, the government could have allowed the additional investment with non-voting shares.

Will it go against the swadeshi ideology you have been committed to?

Not FDI in the defence sector. FDI in the financial sector, in general, and beyond 26 per cent in insurance will not be in the national interest.

Former defence minister A K Antony has alleged the proposal to increase FDI from 26 per cent to 49 per cent in defence production will harm our national security.

I disagree. It will enhance our capacity for domestic defence production Arms production joint ventures and arms procurement are both as much issues of commerce as  geo-political. 

Has the Modi government succumbed to international lobbies and thereby took the decision?

The international arms lobby would actually try to ensure India does not open the FDI route for defence production, as that would make it difficult for them to sell arms to India. 

Has the government, by and large, implemented the swadeshi agenda on the other proposals in the Union Budget?

This is the only budget in recent times where the emphasis is on the domestic economy, domestic savings and particularly family savings through risk-free instruments. The most important domestic agenda is contained in para 102 of the Budget speech, in respect of unincorporated businesses.

What according you will be the government's priorities in the defence sector for its growth, procurement of arms and equipment and protecting its apolitical identity?

 

I think the government policies will be to ensure that domestic production capacity is encouraged through public sector and private sector partnering foreign governments and parties in defence JVs. Arms production JVs and arms procurement both are as much issues of commerce as they are geo-political. 

 

What is your comment on other proposals in the budget? Has the government by and large implemented the Swadeshi agenda or its half glass empty like situation?

 

This is the only budget in recent times where the emphasis is on domestic economy, domestic savings and particularly family savings through risk-free instruments. The most important domestic agenda is contained in para 102 of the budget speech in respect of un-incorporated businesses.