India Called For Relaxing FDI Cap In Defence Sector

Washington: Asserting that the 26 percent FDI cap acts as a disincentive for foreign companies to invest in India’s crucial defence sector, an Indian defence expert has called for increasing the investment limit.

Increase in FDI in the defence sector becomes all the more important as India and the U.S. are working to boost their defence ties and co-development under the Defence Trade Initiative (DTI), said Vivek Lall, Chairman of the Indo-U.S. Strategic Dialogue by the Indo-American Chamber of Commerce.

"All this can be achieved by India relaxing the 26 per cent limit on FDI in the defence sector: a regulation that is widely attributed to have de-incentivised foreign companies’ moves to invest in the Indian defence sector and transfer advanced technologies to it," said Lall.

Lall, who recently held high discussions in Manama with the U.S. Defence Secretary, Chuck Hagel on India-U.S. strategic dialogue and policy issues especially pertaining to defence sector, said more strategic collaboration between India and U.S. is inevitable.

The United States, he said, needs to regard the defence industrial capability gap between itself and India as an opportunity for collaboration rather than an obstacle.

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