New Delhi:
Whether to allow more Foreign Direct Investment or FDI in defence has created a rift between two senior members of the cabinet.
Defence Minister AK Antony has objected stridently to Commerce Minister Anand Sharma's proposal to increase the 26 per cent foreign investment that's currently allowed in the defence sector.
In a note to Mr Sharma, the Defence Minister has argued, "Our effort is to build up indigenous capability in this field by encouraging companies to get into design and development of modern weapons systems. For this purpose, we are actively encouraging the involvement of private sector in defence. We are importing weapons systems for our immediate requirements till we develop our systems."
The Commerce Minister had written to Mr Antony in May, asking for the limit on foreign investment to be raised to 79 per cent; he revised this to 49 per cent in a subsequent note.
The Commerce Minister and Finance Minister P Chidambaram have been lobbying for more foreign investment in different sectors. Earlier this week, the Telecom Commission agreed that the cap on FDI in telecom should be raised to 100 per cent from the existing 74 per cent. The proposal will now be considered by the cabinet.
Last month, Mr Chidambaram said, "The government is looking at FDI caps to see if they are indeed serving the purpose. Otherwise the caps could be revisited."
In September, the Prime Minister's decision to allow foreign super-chains to enter India's vast retail sector forced his government into a minority; Mamata Banerjee withdrew her Trinamool Congress from the ruling coalition in protest against what she described as "an anti-people policy."
The PM and Finance Minister have repeatedly said that they plan to introduce more reforms to boost foreign investor confidence and resuscitate the sluggish economy.
Defence Minister AK Antony has objected stridently to Commerce Minister Anand Sharma's proposal to increase the 26 per cent foreign investment that's currently allowed in the defence sector.
In a note to Mr Sharma, the Defence Minister has argued, "Our effort is to build up indigenous capability in this field by encouraging companies to get into design and development of modern weapons systems. For this purpose, we are actively encouraging the involvement of private sector in defence. We are importing weapons systems for our immediate requirements till we develop our systems."
The Commerce Minister had written to Mr Antony in May, asking for the limit on foreign investment to be raised to 79 per cent; he revised this to 49 per cent in a subsequent note.
The Commerce Minister and Finance Minister P Chidambaram have been lobbying for more foreign investment in different sectors. Earlier this week, the Telecom Commission agreed that the cap on FDI in telecom should be raised to 100 per cent from the existing 74 per cent. The proposal will now be considered by the cabinet.
Last month, Mr Chidambaram said, "The government is looking at FDI caps to see if they are indeed serving the purpose. Otherwise the caps could be revisited."
In September, the Prime Minister's decision to allow foreign super-chains to enter India's vast retail sector forced his government into a minority; Mamata Banerjee withdrew her Trinamool Congress from the ruling coalition in protest against what she described as "an anti-people policy."
The PM and Finance Minister have repeatedly said that they plan to introduce more reforms to boost foreign investor confidence and resuscitate the sluggish economy.
Track Latest News Live on NDTV.com and get news updates from India and around the world
