The Swadeshi Jagran Manch has raised concerns over certain provisions of the Defence Acquisition Procedure (DAP) 2020, which may defeat its purpose of supporting domestic manufacturing.

“The draft of the Defence Acquisition Procedure (DAP) 2020, issued inJanuary 2020, was being read in the context of the then Foreign Direct Investment (FDI) Policy, where FDI under ‘automatic route’ was restricted to 49 per cent. We feel that with the change in FDI Policy allowing FDI up to 74 per cent under automatic route, the definition of ‘Indian vendor’ has been diluted significantly to such an extent that any foreign company can register itself in India and can acquire 74 per cent equity and still continue to be called Indian vendor, Swadeshi Jagran Manch (SJM) said in a letter to Prime Minister Narendra Modi.

SJM is of the view that an ‘Indian vendor’ should only mean an entity in which majority ownership and control is retained by Indian Resident Citizens.

“Diluting the definition of ‘Indian vendor’ will be a deadly blow to the Indian defence industry. It would cause a severe blow to the existence of the domestic defence industry, both big and small, which has developed indigenously, as foreign companies would start getting the same treatment, which domestic industry gets especially under ‘Buy Indian (IDDM)’ and ‘Buy Indian’ categories, where special preferences are given to the ‘Indian vendor’,” said the SJM letter.

According to SJM, if a foreign company is registered in India and has started making in India, its technology policy is not governed by Indian laws butby the laws of the country of their origin.

All gains, which were expected by banning imports of 101 defence items, would be squandered away as foreign companies establishing their unitswould be covered by procurement by the government as a domestic company, said SJM.

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