NEW DELHI: The Centre has said its latest policy on allowing 49 per cent foreign direct investment (FDI) in the defence sector has taken care of all security concerns, apart from it finalising and putting in public domain a security manual for private players in the sector.
Defence Minister Arun Jaitley told the Rajya Sabha in a written reply that since defence companies having the FDI would have Indian management and control, the security concerns are duly taken care of.
He told the House that the foreign investment in Indian companies can be made only after approval by the Foreign Investment Promotion Board (FIPB).
“In the Union Budget 2014-15, it has been announced that the composite cap of foreign exchange is being revised to 49 per cent with full Indian management and control through FIPB route for defence sector,” Jaitley said.
“Since defence companies having foreign investment will have Indian management and control and foreign investment in such companies will be approved through the FIPB route, security concerns are duly taken care of,” he said.
“Besides, the government has finalised and put in public domain a security manual for private sector defence manufacturing units,” he said.
Since 2001 when the defence sector was opened up for the FDI, the cap for involvement of firms from abroad in Indian entities was 26 per cent. Only on a case-to-case basis and after considering the technology that could accrue to India, the government allowed more than 26 per cent FDI.