NEW DELHI (Sputnik) — The order is said to have been thought up to promote foreign direct investment (FDI) in the defense sector which has been meager due to the belief that there is a dearth of business.
"The FDI changes merely do not ensure that immediately the entry of participants will take place because there is only one purchaser in India i.e. Indian government. So, unless opening of FDI is accompanied by some reasonable possibility of possible investors getting order, he is not going to set up an establishment. It is linked to the kind of order he gets. There are no two procurers, there is only one and that is why the strategic partner policy now has been brought in as it will supplement the FDI policy," Indian Defense Minister Arun Jaitley said in New Delhi.
In strategic policy too, 49 % FDI cap has been kept for the production of defense platforms and the companies will be in control of Indian entities.
"In certain extreme circumstances of conflict like war, the Government of India would have the right to acquire control over the intellectual property used and facilities developed pursuant to the strategic partnership," the policy document said.
"Whether the strategic partners come through FDI route or he just comes with technology tie-up they would be free to do so," Jaitley added.
India imports 70 percent of its military hardware from different countries which it wants to bring down by various means including setting up manufacturing units of foreign firms in India.