This refers to Ajai Shukla's column "Defence needs projects, not FDI" (Broadsword, June 10). While Shukla identifies certain issues in defence procurement, including the transfer of technology and international export restrictions, his linking them with higher foreign direct investment (FDI) ownership limits is misplaced. These issues must be delinked from ownership levels.
As a mid-size US defence equipment manufacturer, we are eager to invest in transferring production facilities to India, but are put off by the existing rigid ownership restrictions. Our reason for wanting to come to India is simple: to produce high quality products at a cheaper cost. Our internal estimate is that we will create 25 skilled job opportunities for every incremental investment of $1 million. In our own case, as a publicly-traded company, our diverse shareholder base would not be supportive of transferring production facilities to India if we dilute their ownership while doing so.
A higher FDI ownership limit that is non-discretionary will create employment, reduce imports (India, with total defence imports of $5.9 billion, imported $1.9 billion of military equipment from the US last year, making it the biggest foreign buyer of US weapons, according to research from IHS Jane's), provide impetus to the moribund offsets policy and help create the electronics ecosystem that India is so desperate for
We understand that any announcement to increase FDI ownership limits by the Narendra Modi administration will be reciprocated by US investment and transfer of technology, and this should be encouraged.
Manjit Singh Kalha, Member, Board of Directors, The LGL Group Orlando, USA
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