Why some people fear that 100% FDI in defence sector will compromise national security

While many in the private sector are enthusiastic about allowing 100% foreign investment in defence, other warn that it could turn India into a mere manufacturing centre, without much control over the latest technologies.

Suggestions last week that the Modi government may increase foreign direct investment in private defence production from the current 26% to 100% has led to concerns that the move could turn India into a mere manufacturing centre, without much control over the latest technologies.

Even though the finance ministry has not yet made an official announcement, the plan has raised a stir within the defence production industry, both public and private. Already, the Centre of Indian Trade Unions has declared its opposition to the proposal on the grounds that it would be detrimental to indigenous defence production by public sector units and would compromise national security.

India has permitted FDI in defence only since 2001, when the private sector was allowed entry in defence production. Before that, limited production was carried out by eight Defence Public Sector Undertakings, very few of which were involved in manufacturing heavy equipment for the armed forces. For this, India has relied on foreign manufacturers. As a result, the country has become the world’s largest importer of arms since 2010. In fact, military expenditure in India has been increased by 231% between 2001 and 2011:

However, even when 26% FDI was allowed, the private defence production sector attracted very limited foreign investors. Between 2000 and 2010, the inflow of FDI in defence has been just $150,000, estimates Indian Strategic magazine. By comparison, this is how much total foreign investment Indian businesses has attracted over the past three years.

Defence experts say that the 26% cap has inhibited interest in the sector. It offers foreign companies only limited scope for meaningful returns on their investments, and does not allow them to retain control over their technology, said Laxman Behera, a research fellow at Delhi’s Institute for Defence Studies and Analyses.

“In order to give investors more incentives to share their technology with Indian companies, we need to have at least 49% or 74% of FDI, and up to 100% would be ideal,” said Behera, who has argued for 100% FDI in the sector.

In the past decade, with 26% FDI, smaller defence production companies have been able to bring in basic technologies for manufacturing arms and weapons systems. “However, these have not been the latest technologies,” said SM Vaidya, executive vice-president of the aerospace division at Godrej & Boyce, which has been manufacturing air frames for India’s BrahMos missiles, among other things. “With 100% FDI, companies like Airbus or Boeing will be able to bring their latest technologies to India, although these technologies will be fully guarded by them.”

Vaidya believes this would be the fastest way for India to provide its armed forces with equipment, without losing out on revenue for imports.

Said Behera, “It will also generate employment in India and indirectly benefit the economy through the multiplier effect.”

However, not everyone shares this enthusiasm. “As of now, the pace of manufacturing is slow in India, and we need to ensure we have the right policy frameworks in place to support 100% FDI,” said Indrapal Singh, a former president of industrial engineering units at Godrej. “Allowing 100% FDI right now might be a knee-jerk reaction – putting a cap at 49% might be a better idea.”

For some companies, the biggest concern with allowing complete foreign investment in defence relates to the intellectual property rights over technology. “All FDI policies must be in the national interest, for which it is necessary that the entity manufacturing defence equipment should own the intellectual property rights as well,” said a senior executive at the Kalyani Group, a company that hopes to become a big player in the production of artillery and specialised vehicles. “We need to be a self-reliant country.”


We welcome your comments at
Sponsored Content BY 

Ten awesome TV shows to get over your post-GoT blues

With those withdrawal symptoms kicking in, all you need is a good rebound show.

Hangovers tend to have a debilitating effect on various human faculties, but a timely cure can ease that hollow feeling generally felt in the pit of the stomach. The Game of Thrones Season 7 finale has left us with that similar empty feeling, worsened by an official statement on the 16-month-long wait to witness The Great War. That indeed is a long time away from our friends Dany, Jon, Queen C and even sweet, sweet Podrick. While nothing can quite replace the frosty thrill of Game of Thrones, here’s a list of awesome shows, several having won multiple Emmy awards, that are sure to vanquish those nasty withdrawal symptoms:

1. Billions

There is no better setting for high stakes white collar crime than the Big Apple. And featuring a suited-up Paul Giamatti going head-to-head with the rich and ruthless Damien Lewis in New York, what’s not to like? Only two seasons young, this ShowTime original series promises a wolf-of-wall-street style showcase of power, corruption and untold riches. Billions is a great high-octane drama option if you want to keep the momentum going post GoT.

Watch Billions Now

2. Westworld

What do you get when the makers of the Dark Knight Trilogy and the studio behind Game of Thrones collaborate to remake a Michael Crichton classic? Westworld brings together two worlds: an imagined future and the old American West, with cowboys, gun slingers - the works. This sci-fi series manages to hold on to a dark secret by wrapping it with the excitement and adventure of the wild west. Once the plot is unwrapped, the secret reveals itself as a genius interpretation of human nature and what it means to be human. Regardless of what headspace you’re in, this Emmy-nominated series will absorb you in its expansive and futuristic world. If you don’t find all of the above compelling enough, you may want to watch Westworld simply because George RR Martin himself recommends it! Westworld will return for season 2 in the spring of 2018.

Watch Westworld Now

3. Big Little Lies

It’s a distinct possibility that your first impressions of this show, whether you form those from the trailer or opening sequence, will make you think this is just another sun-kissed and glossy Californian drama. Until, the dark theme of BLL descends like an eerie mist, that is. With the serious acting chops of Reese Witherspoon and Nicole Kidman as leads, this murder mystery is one of a kind. Adapted from author Liane Moriarty’s book, this female-led show has received accolades for shattering the one-dimensional portrayal of women on TV. Despite the stellar star cast, this Emmy-nominated show wasn’t easy to make. You should watch Big Little Lies if only for Reese Witherspoon’s long struggle to get it off the ground.

Watch Big Little Lies Now

4. The Night of

The Night Of is one of the few crime dramas featuring South Asians without resorting to tired stereotypes. It’s the kind of show that will keep you in its grip with its mysterious plotline, have you rooting for its characters and leave you devastated and furious. While the narrative revolves around a murder and the mystery that surrounds it, its undertones raises questions on racial, class and courtroom politics. If you’re a fan of True Detective or Law & Order and are looking for something serious and thoughtful, look no further than this series of critical acclaim.

Watch The Night Of Now

5. American Horror Story

As the name suggests, AHS is a horror anthology for those who can stomach some gore and more. In its 6 seasons, the show has covered a wide range of horror settings like a murder house, freak shows, asylums etc. and the latest season is set to explore cults. Fans of Sarah Paulson and Jessica Lange are in for a treat, as are Lady Gaga’s fans. If you pride yourself on not being weak of the heart, give American Horror Story a try.

Watch American Horror Story Now

6. Empire

At its heart, Empire is a simple show about a family business. It just so happens that this family business is a bit different from the sort you are probably accustomed to, because this business entails running a record label, managing artistes and when push comes to shove, dealing with rivals in a permanent sort of manner. Empire treads some unique ground as a fairly violent show that also happens to be a musical. Lead actors Taraji P Henson and Terrence Howard certainly make it worth your while to visit this universe, but it’s the constantly evolving interpersonal relations and bevy of cameo appearances that’ll make you stay. If you’re a fan of hip hop, you’ll enjoy a peek into the world that makes it happen. Hey, even if you aren’t one, you might just grow fond of rap and hip hop.

Watch Empire Now

7. Modern Family

When everything else fails, it’s comforting to know that the family will always be there to lift your spirits and keep you chuckling. And by the family we mean the Dunphys, Pritchetts and Tuckers, obviously. Modern Family portrays the hues of familial bonds with an honesty that most family shows would gloss over. Eight seasons in, the show’s characters like Gloria and Phil Dunphy have taken on legendary proportions in their fans’ minds as they navigate their relationships with relentless bumbling humour. If you’re tired of irritating one-liners or shows that try too hard, a Modern Family marathon is in order. This multiple-Emmy-winning sitcom is worth revisiting, especially since the brand new season 9 premiers on 28th September 2017.

Watch Modern Family Now

8. The Deuce

Headlined by James Franco and Maggi Gyllenhaal, The Deuce is not just about the dazzle of the 1970s, with the hippest New York crowd dancing to disco in gloriously flamboyant outfits. What it IS about is the city’s nooks and crannies that contain its underbelly thriving on a drug epidemic. The series portrays the harsh reality of New York city in the 70s following the legalisation of the porn industry intertwined with the turbulence caused by mob violence. You’ll be hooked if you are a fan of The Wire and American Hustle, but keep in mind it’s grimmer and grittier. The Deuce offers a turbulent ride which will leave you wanting more.

Watch The Deuce Now

9. Dexter

In case you’re feeling vengeful, you can always get the spite out of your system vicariously by watching Dexter, our favourite serial killer. This vigilante killer doesn’t hide behind a mask or a costume, but sneaks around like a criminal, targeting the bad guys that have slipped through the justice system. From its premier in 2006 to its series finale in 2013, the Emmy-nominated Michael C Hall, as Dexter, has kept fans in awe of the scientific precision in which he conducts his kills. For those who haven’t seen the show, the opening credits give an accurate glimpse of how captivating the next 45 minutes will be. If it’s been a while since you watched in awe as the opening credits rolled, maybe you should revisit the world’s most loved psychopath for nostalgia’s sake.

Available starting October

10. Rome

If you’re still craving an epic drama with extensive settings and a grandiose plot and sub-plots, Rome, co-produced by HBO and BBC, is where your search stops. Rome is a historical drama that takes you through an overwhelming journey of Ancient Rome’s transition from a republic to an empire. And when it comes to tastes, this series provides the similar full-bodied flavour that you’ve grown to love about Game of Thrones. There’s a lot to take away for those who grew up quoting Julius Caesar, and for those looking for a realistic depiction of the legendary gladiators. If you’re a history buff, give this Emmy-winning show a try.

Watch Rome Now

For your next obsession, Hotstar Premium has you covered with its wide collection of the most watched shows in the world. Apart from the ones we’ve recommended, Indian viewers can now easily watch other universally loved shows such as Silicon Valley and Prison Break, and movies including all titles from the Marvel and Disney universe. So take control of your life again post the Game of Thrones gloom and sign up for the Hotstar Premium membership here.

This article was produced by the Scroll marketing team on behalf of Hotstar and not by the Scroll editorial team.