Article Posted on : - Nov 19, 2009

A File Photo.

NEW DELHI/WASHINGTON (PTI): The Indian Air Force Thursday said the Government should take "bolder" steps to allow more foreign investments in the Defence sector, a view that found resonance in the US which wanted a raise in the FDI cap in the area.

IAF Vice Chief Air Marshal P K Barbora while making a strong pitch for allowing more FDI especially in the defence sector said the steps taken so far were not bold enough.

"We have taken steps but they are not bold enough. We need to be bolder to invite Foreign Direct Investment (FDI) more so into defence use," he told a CII seminar on energising aviation sector in India. Government has ruled out revising upwards the 26 per cent cap on FDI in defence sector.

In Washington, the Assistant Secretary of State for South and Central Asia Robert Blake said, "One thing that I think the Indian government could do would be to lift the cap on foreign equity in Indian defence firms, from 26 per cent to 49 per cent."

Blake's comments came just ahead of Prime Minister Manmohan Singh's summit talks with President Barack Obama in Washington on November 24.

Blake told reporters at a conference that American companies are very interested in seeing investment caps lifted in the insurance sector, in the defence sector, in several other -- in banking, in retail.

"And all of those would provide significant new opportunities to further expand our trade and investment."

At present, foreign companies are allowed to invest only 26 per cent in Indian companies. Some of the global defence giants such as BAE Systems had proposed to start a joint venture with Mahindra Defence Systems with 49 per cent stakes but it did not get government's approval.