Article Posted on : - Apr 04, 2015

A file photo.

NEW DELHI (PTI): The Government needs to further increase the FDI cap to at least 74 per cent in order to attract foreign investment in the defence sector, an Assocham-PwC joint study said on Friday.

The defence sector in the country has immense possibilities for attracting investments, setting up manufacturing units, obtaining technologies and capabilities and generating high skilled employment, quoting the study industry body Assocham said in a statement.

"Though FDI cap has been recently increased, 49 per cent may not succeed in bringing investment and advanced technology into defence sector, thus in order to facilitate inflow of capital and setting up of entities of original equipment manufacturers (OEMs) and their suppliers with transfer of technology, it may be desirable to allow either 100 per cent or, in case that is not possible, at least a 74 per cent FDI in the sector," the study revealed.

To truly leverage the combined potential of one of the largest defence acquisition programmes of the world, a liberal offset policy and India's advantage in low-cost manufacturing and skilled manpower, it is essential that government policies create synergies rather than contradictions, it added.