The proposal was to raise FDI to 49 per cent, 74 per cent or even 100 per cent, in exceptional cases, to develop a defence industrial base (DIB), indigenously design and manufacture defence and aerospace products tailored to the needs of Indian armed forces, and to create opportunities for employment in the country.
"The proposed policy resonates with the relevant portion of the address by the President of India in the joint session of Parliament," said Ficci, in a statement. "While higher levels of FDI were already allowed in the existing policy, on a case-to-case basis, Ficci sees this proposal in the light of increasing the share of manufacturing in GDP (gross domestic product) to 25 per cent as enshrined in the national manufacturing policy."
Also Read
In a letter to the Department of Industrial Policy and Promotion (DIPP) in 2012, Ficci said the control must remain in Indian hands. It even had said the foreign company's home government must provide "in-principle permission to share technology with Indian partner", while the intellectual property rights should remain with Indian partner. Its demand then was to cap FDI by about 49 per cent.
However, it advocated that adequate and mutual strategically beneficial safeguards be put in place while deciding higher levels of FDI in defence production.
"Exceptions allowing FDI even up to 100 per cent should be allowed as exceptions, on case to case basis, in cases such as aircraft engines, advanced missile guidance systems, seekers, production of smart materials, high strength carbon fibre etc, for which investments can be justified only by volumes available through integration with the global supply chain of the OEM's," the statement added.
"India must make use of FDI limit enhancement to leverage its position as one of the largest markets for defence equipment to achieve this strategic goal. It is important to note that no other country with a strong indigenous technical and industrial base allows the levels of FDI in defence that are being offered by India."