The Commerce and Industry Ministry on Monday proposed raising the Foreign Direct Investment (FDI) cap in defence to 74 per cent from 26 per cent, amid indications that multi-brand retail could be the next in line.

The Department of Industrial Policy and Promotion (DIPP), citing the urgent need to upgrade the equipment of the armed forces as the bulk of them had become obsolete, put the proposal in public domain on Monday and sought the views of the stakeholders. The cut off date is July 31.

The proposal made it clear that the hike in FDI need not mean any commitment on procuring from companies that have set up facilities in India. “We are looking at various sectors, including multi-brand retail and defence,” Commerce and Industry Minister Anand Sharma told TheHindu recently.

“We would like to have FDI in technologically sensitive sectors in order to benefit the people and the nation in different spheres. There will be no blank cheque opening of any sector,'' he said.

The DIPP plans to come out with six discussion papers on FDI investment norms, including one in agriculture. This is in sharp contrast to the scenario in the UPA I regime, when it shelved plans to throw open multi-brand retail after strong opposition from the Left parties and small and medium traders.

“There need not be any commitment on procurement and these players will have to participate in the Request for Proposal to technically qualify and also compete in the financial bid,'' the discussion paper said.

“Only 15 per cent of India's defence equipment can be described as state-of-the-art and nearly 50 per cent is suffering obsolescence,” the paper stated. “There is, therefore, an urgent need to enhance the deterrent and operational capabilities of the armed forces.''

Since the entire issue has been placed in the public domain, the DIPP clarified that the suggested policy should not be construed as the firm views of the government.

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