26% cap on foreign investment in defence be reviewed: Barbora

IAF Vice Chief Air Marshal P K Barbora on Thursday contended that the 26 per cent cap on foreign investment in the defence sector was making companies abroad "reluctant" to invest.

New Delhi: IAF Vice Chief Air Marshal P K
Barbora on Thursday contended that the 26 per cent cap on foreign
investment in the defence sector was making companies abroad
"reluctant" to invest without getting much control in the new
entities in India and suggested a review of the policy.
Barbora, who made it clear that he was expressing his
personal views, also favoured simplification of the offsets
clause in the defence procurement policy.

"FDI of 26 per cent at this moment is a restricting
factor especially in respect of defence... This can be
reviewed," he said addressing a seminar here.

The IAF Vice Chief said with the government clearing a
number of deals in the recent past, there was an opportunity
with the Indian industry to grab USD 40 billion worth of
offsets.

Under government`s offsets policy, foreign vendors
have to reinvest at least 30 per cent of the deals worth over
Rs 300 crore back in Indian markets.

He said foreign companies were finding the offsets
clause to be understood, which could lead to hold ups in
procurement procedures also.
Asked if Indian aerospace industry was lagging behind
the rest of the world, Barbora said, "We have been left behind
and that is the reason we had to go ahead to buy these 126
aircraft because we don`t have the technology to create
something of that nature. But we are developing and we will
catch up."

"We are moving ahead but we are slow because we still
don`t have the technology that is required to meet up with the
world standards at that pace. As I said that now we are moving
towards co-designing and co-development stage. That is the
time we will meet this," he added.

PTI

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