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.