New Delhi, Jul 16: FDI cap in defence sector will remain at 26 per cent and proposals beyond that will be considered by the Cabinet Committee on Security on case to case basis, according to a government decision which showed that Defence Ministry prevailed over the Commerce Ministry.
“FDI cap is 26 per cent in defence sector, that stands like that. Any FDI proposal beyond 26 per cent which brings state-of-the-art technology, that proposal would be considered by the CCS,” Commerce Minister Anand Sharma told reporters here.
The Commerce Minister was addressing a press conference on decisions taken by a meeting headed by Prime Minister Manmohan Singh on FDI in different sectors.
The definition of state-of-the-art technology would be determined by the Defence Ministry, he said. Commenting on the decision, Defence Ministry officials said depending on the quality of the technology on offer, the CCS will take a call on the proposals for FDI in defence sector.
The decision is on the lines of the assertion by Antony, who recently wrote to Sharma opposing any move to raise the cap to 49 per cent.
Overruling the Commerce Ministry's proposal, Antony had said that “The deliberated view of the defence ministry .. remains that the FDI cap in the defence manufacturing sector should remain at 26 per cent.”
At the same time, he had said that whenever FDI beyond 26 per cent “is likely to result in access to modern and state-of-the-art technology in the country, decisions can be taken to allow higher FDI on a case to case basis by the Cabinet Committee on Security.”
Opposing that proposal, Antony had said that it will be a “retrograde” step and “stymie” the growth of the domestic industry while increasing dependence on foreign manufacturers.