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Opening up of the defence sector to foreign direct investment (FDI) does not necessarily mean that the country will have access to the latest technology, Amit Mitra, West Bengal Finance, Commerce and Industry and IT Minister, said here on Friday.
The Centre has recently obtained the Cabinet approval for allowing up to 49 per cent FDI in the defence sector. FDI ceiling in the sector was hiked from the previous 26 per cent.The move is supposed to boost domestic industry that imports up to 70 per cent of its military hardware.
According to the minister, opening up of the defence sector would actually be detrimental to indigenous manufacturing.
However, the focus should actually be on promoting the small and medium enterprises in the defence sector. Indigenisation would help reduce the import bill of the country substantially.
“Instead of FDI, our focus should be on pushing domestic manufacturing through MSMEs,” Mitra said at a seminar on 'Industry-Defence Linkage' organised by the Confederation of Indian Industry (CII).
Pointing out that Korea was one such country which has successfully leveraged indigenous manufacturing through small and medium-scale organisations in the defence sector, Amit Mitra said that there was no reason as to why it was not possible in India.
“If Korea can do it, why can we not do the same? I think we can do better,” he maintained.
Focus on pushing manufacturing through MSMEs will the help create jobs and push the country’s GDP, Mitra added.
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