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Terming the Government's proposal to hike the foreign direct investment (FDI) level in defence to 49 per cent as “disappointing”, Amber Dubey, Partner and Head of Aerospace and Defence, KPMG, said, “We have just pushed away investments in defence manufacturing by another year. Hope better judgement prevails and we have higher FDI, with adequate checks and balances, announced later this year.”
Finance Minister Arun Jaitley said the composite FDI cap in defence was being hiked to 49 per cent with full Indian management and control through the Foreign Investment Promotion Board route. According to Amber, this may create the same issues of sleeping partners and ‘effective control’, as seen in the airline sector.
Government intentThough agreeing with Amber, EY’s Ganesh Raj, however, felt it was a step in the right direction.
He felt hiking the FDI to 51 per cent would have been better as a company transferring technology would like to have control of the Indian company to which it transferred the technology.
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