The Centre’s move to allow 100 per cent Foreign Direct Investment in the defence sector has run into criticism from the Heavy Alloy Penetrator Project Employees Union.
At present, only 26 per cent FDI is allowed in defence manufacturing, though the government can clear more foreign investments on a case-to-case basis. “The new government, within a few days of assuming office, is attempting to raise the FDI limit from 26 per cent to 100 per cent. It is shocking news for many patriotic citizens. It will have a great impact on our country’s safety and security,” said A. Sathiyavaheesan, general secretary, HAPP Employees Union.
The decision would affect most of the Public Sector Undertakings (PSUs) making arms and weapons systems. A number of private groups, including Tata, L&T and Mahindra & Mahindra had already set up defence manufacturing units. There were reports that these units had affected the financial health of the PSUs to some extent. If more FDI was allowed, the PSUs would become unviable, the union added.
In a statement here, Mr. Sathiyavaheesan said the first Defence Minister, Krishnan Menon, played a key role in the establishment of the Ordnance Factories Board to control production and sale of arms, weapons and vehicles. It was established to prevent private defence manufacturers, who attempted to earn abnormal income during war periods. More than 10 domestic and foreign companies had been blacklisted by the government because of corruption charges.
Urging the Centre to drop the plan, members of the HAPP Employees Union would stage a protest in front of the HAPP unit here on Monday.