Article Posted on : - May 17, 2010

A file photo

NEW DELHI (PTI): The industry ministry Monday proposed FDI up to 74 per cent in the defence sector from the present 26 per cent, stating urgent upgrade of equipment in the armed forces was needed as a bulk of them suffered from obsolescence.

The Department of Industrial Policy and Promotion (DIPP), however, said the hike in the foreign direct investment (FDI) need not mean any commitment on procuring from companies, which have set up the facilities in India.

"There need not be any commitment on procurement and these players will have to participate in the Request for Proposal to technically qualify and also compete in the financial bid," DIPP said in a discussion paper.

It has sought views of different stakeholders till July 31 this year.

"Only 15 per cent of India's defence equipment can be described as state-of-the-art and nearly 50 per cent is suffering obsolescence...there is, therefore, an urgent need to enhance the deterrent and the operational capabilities of the armed forces...,"

Since the entire issue has been placed in the public domain, the DIPP clarified that the suggested policy should not be construed as the firm views of the government.