Batting for increase in foreign direct investment (FDI) in defence sector, Union Commerce Minister, Anand Sharma said that it was needed to make India a defence equipment manufacturing country. He also ruled out complete ban on FDI in pharmaceutical sector but said the government was having a close re-look at the norms.
In an interaction with visiting Indian journalists here, Mr. Sharma said it was important that India should become a manufacturing base for defence equipment and for that to happen the FDI needs to be encouraged. ``It is time to bring in high end technologies in the defence sector to meet our needs and to become net exporters of this equipment in the future. We are holding consultations and a group headed by Finance Minister, pranab Mukherjee had recently held meetings to review the situation. The matter is under discussion and any decision would be taken only after proper feedback from all the stakeholders including the Defence Ministry,’’ he remarked.
Mr. Sharma said he had held talks with the Defence Minister, A. K. Antony and a final call will be taken only after undertaking a due process of consultation. The Commerce Ministry has floated a discussion paper proposing to raise the FDI in defence production to 74 per cent, saying it would help ensure technology transfer and funds to effectively replace imports, estimated at over $8 billion.
Mr. Sharma said the paper circulated by the Department of Industrial Policy and Promotion (DIPP) was receiving feedback from various stakeholders and their views were being taken on board on how to open the defence for FDI. At present, 26 per cent FDI is allowed in the sector. ``the idea behind opening up of the defence sector to FDI is to ensure cutting edge technology for Indian companies and armed forces through joint ventures and collaborations and get the best technology and investments into this sector,’’ he remarked.
Similarly, Mr. Sharma ruled out complete ban on FDI in pharma sector but said the government was taking a close look at various aspects including the issue of takeovers of Indian pharma companies. ``We will take on board the views and concerns expressed by the Health and Family Welfare Ministry and certainly work out a comprehensive policy document that is in the interest of the nation and its people,’’ he added.
An expert group constituted under the Planning Commission has also recommended reducing FDI limit in the pharmaceutical sector to below 49 per cent in order to bring down the cost of medicines. Currently, the government allows 100 per cent FDI in the sector through automatic route.
The 15-member high level group on universal health coverage, chaired by K. Srinath Reddy, in its report has said that the government should revisit FDI rules to bring down share of foreign players to less than 49 per cent. The expert group has also recommended reviving drug PSUs in the country by infusing capital and providing autonomous status to them.
Recently the Commerce Ministry had appointed research agency Ernst & Young to study the impact of a series of acquisitions in the domestic drug industry by foreign companies.