With Defence Minister A. K. Antony unwilling to relent on enhancing foreign direct investment (FDI) in the defence sector, the Industry Ministry has written to the Cabinet Secretary accusing the Defence Ministry of refusing to recommend cases for issue of industrial licences for defence manufacturing despite repeated reminders. Both ministries have been at loggerheads over the issue of enhancing the FDI limit in the defence sector from the present 26 per cent to 74 per cent as recommended by the Department of Industrial Policy and Promotion (DIPP). Despite repeated discussions and clarifications on the issue, the Defence Ministry has not responded favourably to the proposal. In its letter to Cabinet Secretary Ajit Kumar Seth, the DIPP has pointed out that the delay in recommending cases for industrial licences had led to a situation in which private sector companies were not able to get defence procurement orders besides they were not able to make investments in new capacity and India was missing out an opportunity for getting substantial FDI in the defence sector. In the September 8 letter, the DIPP has pointed out that out of the 49 cases that have faced delays; some have been pending since March, 2008. “It has been noticed that, of late, the Department of Defence Production has been refusing to recommend cases for industrial licence, citing reasons which prima facie do not seem justifiable,'' the letter states.
The Department of Defence Production is part of the Defence Ministry.
The DIPP said the Defence Ministry had declined to recommend cases on the plea that the investments in those cases were meagre or that the items should be manufactured by the public sector undertakings (PSUs) only.
