RSS wing red flags changes in defence procurement policy

Ashwani Mahajan, chief of Swadeshi Jagran Manch. File.   | Photo Credit: REUTERS

The Rashtriya Swayamsewak Sangh (RSS)-affiliated Swadeshi Jagaran Manch (SJM) has red flagged the raising of the foreign direct investment (FDI) limit in defence production in India under the automatic route from 49% to 74%, saying that this may lead to undermining of Indian vendors and domestic players.

In a letter to Prime Minister Narendra Modi, the all India convenor of the SJM, Ashwani Mahajan has asked that the definition of “Indian vendor” be made clear with regard to the Defence Acquisition Policy, 2020, so that foreign entities do not get advantages over entities owned and promoted by Indian resident citizens under the “buy” and “buy and make” categories.

“We feel that with the changed policy allowing FDI upto 74% under the 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 acquire 74% equity and still continue to be called ‘Indian vendor’ ,” said the letter.

The letter goes on to state that in the SJM’s “considered opinion”, “Indian vendor” should only mean “entities in which majority ownership and control is retained by Indian Resident Citizens”.

Not doing so, according to Mr Mahajan, may cause a “severe blow to the existence of the domestic defence industry”.

“We should not forget that if a foreign company registered in India, and has started manufacturing in India, its technology policy is not governed under Indian laws; they are governed by the laws of the country of their origin. All the gains, which were expected by banning of imports of 101 defence items would be squandered away, as foreign companies establishing their units, would be covered by procurement by the government as a domestic company,” he said.

Procurement, therefore, should be from companies where Indians hold the controlling interest of 51% and above, the letter said.

The Union government had, last month, banned the import of 101 items related to defence and had announced a new draft acquisition policy to encourage domestic manufacture of defence equipment.

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Printable version | Jan 19, 2022 10:14:16 AM |

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