acid rain
BANNED
- Joined
- Nov 10, 2012
- Messages
- 4,688
- Reaction score
- -10
- Country
- Location
I meant apart from defense - fdi cap has been increased for a number of industries, though they do have a number of multicountry defense related production.
Government hikes FDI in defence to 49%, 100% for telecom
- Thread starter janon
- Start date
I meant apart from defense - fdi cap has been increased for a number of industries, though they do have a number of multicountry defense related production.
El Weirdo
BANNED
- Joined
- Jul 26, 2011
- Messages
- 804
- Reaction score
- -1
- Country
- Location
NEW DELHI: Faced with a harsh economic environment, the government on Tuesday opened the doors to greater foreign investment in almost a dozen sectors, including telecom and the tightly-policed defence, for "state-of-the-art" technology.
Prime Minister Manmohan Singh moved in to iron out differences between various wings of the government to push through the fresh round of opening up to boost dwindling confidence in the Indian economy. Apart from telecom and defence, there were two segments of the financial sector - asset reconstruction companies and credit information bureaus - where the FDI ceiling was raised.
There was also the promise of increasing the cap in insurance, and consequently pension, to 49%, although the moves will need parliamentary approval. In several sectors such as oil and gas refining and stock exchanges, the government decided to allow FDI without prior approval.
The measures are aimed at attracting foreign capital, critical for trimming a yawning current account deficit that has rattled the government after the rupee's unabated slide over the past few weeks.
The most significant change was ushered in defence production. While FDI cap in defence sector remained unchanged at 26%, higher limits of foreign investment in state-of-the-art manufacturing would be considered by the Cabinet Committee on Security (CCS), commerce & industry minister Anand Sharma told reporters after the meeting.
Although Sharma did not elaborate, technically, the decision leaves it open for CCS to even allow 100% foreign investment in what the defence ministry will define as "state-of-the-art" segments with safeguards built in to ensure that the technology and equipment are not shared with other countries.
Defence minister A K Antony had concerns over allowing higher FDI, but it was pointed out that while the policy did not specify the CCS option, it could be readily incorporated. An incorrect impression had been created that the CCS caveat was being done away with.
Indian companies keen on foreign tie-ups include L&T, Mahindra & Mahindra and the Tatas. US firm Lockheed Martin is understood to be interested in a collaboration with the Tatas.
India Inc cheered the changes. "...it indicates that reforms are underway. Large number of sectors have either seen an increase in FDI cap or have moved under the automatic route from the Foreign Investment Promotion Board (FIPB) approval," Ficci president Naina Lal Kidwai said.
In telecom, the home ministry's security-related objections were negotiated with the PM and several ministers taking a view that even the current 74% FDI cap offers no protection against unscrupulous practices. Raising the ceiling to 100% is not going to increase the risks that need to be addressed by a more rigorous technical regime.
The home ministry referred to the US's Prism programme, but telecom minister Kapil Sibal argued that the problem was not with FDI itself but concerns over imported chips, switching gears and routers. These could be dealt with by encouraging production in India. Although not stated as such, the home ministry is particularly worried about use of Chinese equipment in the telecom sector.
The government, however, deferred a decision on increasing the cap in civil aviation from 49% to 74% as civil aviation minister Ajit Singh said FDI could wait as there were no interested parties waiting in the wings. He pointed to security concerns in ground handling and customs. His view was endorsed by the PM who said the ministry had taken a considered view.
On raising FDI cap to 49% in media, minister of state for information and broadcasting Manish Tewari said it would be difficult to justify breaking the precedence when regulator Trai's views were taken into consideration. The opinion of Trai and other stakeholders is awaited.
Most of the "batting" for the proposals put forward by the department of industrial policy and promotion was done by commerce minister Anand Sharma and finance minister P Chidambaram.
As was anticipated, the meeting decided to clear the automatic route for 49% FDI in commodity, power and stock exchanges. Courier services permit 100% FDI but this has now been placed on the automatic route as well.
Needed it Soooo darn badly.. Thank angels in heaven
@Abingdonboy , Ur take on this mate?
Prime Minister Manmohan Singh moved in to iron out differences between various wings of the government to push through the fresh round of opening up to boost dwindling confidence in the Indian economy. Apart from telecom and defence, there were two segments of the financial sector - asset reconstruction companies and credit information bureaus - where the FDI ceiling was raised.
There was also the promise of increasing the cap in insurance, and consequently pension, to 49%, although the moves will need parliamentary approval. In several sectors such as oil and gas refining and stock exchanges, the government decided to allow FDI without prior approval.
The measures are aimed at attracting foreign capital, critical for trimming a yawning current account deficit that has rattled the government after the rupee's unabated slide over the past few weeks.
The most significant change was ushered in defence production. While FDI cap in defence sector remained unchanged at 26%, higher limits of foreign investment in state-of-the-art manufacturing would be considered by the Cabinet Committee on Security (CCS), commerce & industry minister Anand Sharma told reporters after the meeting.
Although Sharma did not elaborate, technically, the decision leaves it open for CCS to even allow 100% foreign investment in what the defence ministry will define as "state-of-the-art" segments with safeguards built in to ensure that the technology and equipment are not shared with other countries.
Defence minister A K Antony had concerns over allowing higher FDI, but it was pointed out that while the policy did not specify the CCS option, it could be readily incorporated. An incorrect impression had been created that the CCS caveat was being done away with.
Indian companies keen on foreign tie-ups include L&T, Mahindra & Mahindra and the Tatas. US firm Lockheed Martin is understood to be interested in a collaboration with the Tatas.
India Inc cheered the changes. "...it indicates that reforms are underway. Large number of sectors have either seen an increase in FDI cap or have moved under the automatic route from the Foreign Investment Promotion Board (FIPB) approval," Ficci president Naina Lal Kidwai said.
In telecom, the home ministry's security-related objections were negotiated with the PM and several ministers taking a view that even the current 74% FDI cap offers no protection against unscrupulous practices. Raising the ceiling to 100% is not going to increase the risks that need to be addressed by a more rigorous technical regime.
The home ministry referred to the US's Prism programme, but telecom minister Kapil Sibal argued that the problem was not with FDI itself but concerns over imported chips, switching gears and routers. These could be dealt with by encouraging production in India. Although not stated as such, the home ministry is particularly worried about use of Chinese equipment in the telecom sector.
The government, however, deferred a decision on increasing the cap in civil aviation from 49% to 74% as civil aviation minister Ajit Singh said FDI could wait as there were no interested parties waiting in the wings. He pointed to security concerns in ground handling and customs. His view was endorsed by the PM who said the ministry had taken a considered view.
On raising FDI cap to 49% in media, minister of state for information and broadcasting Manish Tewari said it would be difficult to justify breaking the precedence when regulator Trai's views were taken into consideration. The opinion of Trai and other stakeholders is awaited.
Most of the "batting" for the proposals put forward by the department of industrial policy and promotion was done by commerce minister Anand Sharma and finance minister P Chidambaram.
As was anticipated, the meeting decided to clear the automatic route for 49% FDI in commodity, power and stock exchanges. Courier services permit 100% FDI but this has now been placed on the automatic route as well.
Needed it Soooo darn badly.. Thank angels in heaven
@Abingdonboy , Ur take on this mate?
Last edited by a moderator:
illusion8
ELITE MEMBER
- Joined
- Sep 18, 2011
- Messages
- 12,232
- Reaction score
- -20
- Country
- Location
Needed it Soooo darn badly.. Thank angels in heaven
Already posted
http://www.defence.pk/forums/indian-defence/264998-government-hikes-fdi-defence-49-100-telecom.html
.. How come I did not see it ?Anonymous_CryptoSpy
FULL MEMBER
- Joined
- Jul 13, 2013
- Messages
- 224
- Reaction score
- 0
question y fdi in defense sector?? do other countries(Russia,china,USA) have FDI in defence sector?? is the issues unemployment due to FDI addressed?
Gandhi G in da house
ELITE MEMBER
- Joined
- Nov 5, 2010
- Messages
- 9,475
- Reaction score
- -24
- Country
- Location
Too little too late. It's all over now. The Indian economic miracle is over.
illusion8
ELITE MEMBER
- Joined
- Sep 18, 2011
- Messages
- 12,232
- Reaction score
- -20
- Country
- Location
75% of Indians and INdian CEO's are optimistic about India's economic prospects - you seem to be from the balance 25%.
Gandhi G in da house
ELITE MEMBER
- Joined
- Nov 5, 2010
- Messages
- 9,475
- Reaction score
- -24
- Country
- Location
75% of Indians and INdian CEO's are optimistic about India's economic prospects - you seem to be from the balance 25%.
Those CEO's are probably optimistic about the prospects of their own wages rising as they always do each year. While hiring is at its lowest and rupee keeps falling. Consumption too has fallen and prices keep rising.
illusion8
ELITE MEMBER
- Joined
- Sep 18, 2011
- Messages
- 12,232
- Reaction score
- -20
- Country
- Location
You got it wrong - those CEO's and bosses are the first one's to crib if things are not going their way.
Gandhi G in da house
ELITE MEMBER
- Joined
- Nov 5, 2010
- Messages
- 9,475
- Reaction score
- -24
- Country
- Location
Exactly things are just fine for the top bosses of top companies.
I am talking about the middle classes and the poor here.
Abingdonboy
ELITE MEMBER
- Joined
- Jun 4, 2010
- Messages
- 29,597
- Reaction score
- 46
- Country
- Location
Hardly- 26% for all defence deals, 49% (not majority) for special cases where through background checks and vetting has been carried out.this mean foreign companies controlling the price and national security. this is insane. why?
sasi
FULL MEMBER
- Joined
- Oct 18, 2012
- Messages
- 404
- Reaction score
- 0
FDI is twin edged sword. It will hurt us, if proper guidelines and rules is not issued. That's scary thing. We are known for damn f*cked rules and guidelines!
Some reasons why FDI norms in the defence manufacturing sector should not be relaxed
By Ashok Parthasarathi in Commentary
The widely argued view that Foreign Direct Investment ( FDI)is a means for our companies to access “high-end technology” is wrong. Our companies, whether in the public or private sectors, can acquire — and have actually acquired — high-end technologies through technology transfer or license agreements without any FDI. The licence agreement also provides much greater flexibility because such agreements are time-bound. Therefore, in case an Indian company finds its foreign technology supplier has slipped and so is not in a position to offer state-of-the-art technology after the original agreement of 5-10 years expires, it can drop its original supplier and choose another supplier who does. However, if the original technology supplier had made an FDIin the Indian company, the latter would be stuck with the former and thereby be condemned to have to use an inferior technology in perpetuity. There have been many such cases that are seriously deleterious to both the Indian company and the nation.
Thirdly, the foreign company or “partner” that has made the FDItries its level best to over-invoice the prices at which it supplies capital goods and components or parts to the Indian company so as to benefit the “mother company” back home. This leads to huge unnecessary and indefensible loss of precious foreign exchange. A recent case is that of Nokia (India) — the Indian subsidiary with 100 percent FDIby Nokia (Finland) — doing precisely that. Nokia (India) has been caught doing such over-invoicing by the Income Tax authorities and theEnforcement Directorate and has, therefore, been directed to refund the over-invoiced amount of Rs 3,000 crore along with interest and Rs 500 crore penalty.
Then, there is the important aspect of indigenisation. Many studies have shown that foreign companies do not really manufacture in depth theproducts they produce here. Again, Nokia is a good example. A whole decade after they began “making” handsetsof mobile phones here, the indigenous content was a mere25 percent; 75 percent continues to be imported from Nokia (Finland). This leads to huge recurring outflows of foreign exchange, and also to only a minimal transfer of the so-called high-end technology.In comparison, the far more sophisticated wireless communication sets for the defence services, incorporating truly high-end technology — proprietary microchip-based secrecy and security features totally missing from commercial handsets for civilians — have been designed and developed in India. They are being produced with 90 percent Indian content by a PSU, Bharat Electronics Ltd (BEL).
Finally, there is the matter of exports. One of our leading think tanks, Research and Information System for Developing Countries, brought out a detailed report recently on how the level of exports varied as a function of FDIin companies in some ten economic sectors, including defence products exports. Theexhaustive data and analysis covering the last one decade led to the following conclusion: the higher the percentage of FDI, the lower the percentage of exports in total sales.
I now turn to some specific points made by Shaili Choprain On the defensive for no good reason?(25 May).
Firstly, the article as a whole is massively but wrongly pejorative about the Defence PSUs (DPSUs), e.g., use of terms like “monster” DPSUs; HAL is a “non-performer” etc. Sweeping, unsubstantiated generalisations that are incorrect.
Secondly, latest data from the defence ministryindicate that defence imports, which were around 70 percent a decade ago, have now decreased to around 55 percent.
‘Let
full article-read the link.
Some reasons why FDI norms in the defence manufacturing sector should not be relaxed
By Ashok Parthasarathi in Commentary
The widely argued view that Foreign Direct Investment ( FDI)is a means for our companies to access “high-end technology” is wrong. Our companies, whether in the public or private sectors, can acquire — and have actually acquired — high-end technologies through technology transfer or license agreements without any FDI. The licence agreement also provides much greater flexibility because such agreements are time-bound. Therefore, in case an Indian company finds its foreign technology supplier has slipped and so is not in a position to offer state-of-the-art technology after the original agreement of 5-10 years expires, it can drop its original supplier and choose another supplier who does. However, if the original technology supplier had made an FDIin the Indian company, the latter would be stuck with the former and thereby be condemned to have to use an inferior technology in perpetuity. There have been many such cases that are seriously deleterious to both the Indian company and the nation.
Thirdly, the foreign company or “partner” that has made the FDItries its level best to over-invoice the prices at which it supplies capital goods and components or parts to the Indian company so as to benefit the “mother company” back home. This leads to huge unnecessary and indefensible loss of precious foreign exchange. A recent case is that of Nokia (India) — the Indian subsidiary with 100 percent FDIby Nokia (Finland) — doing precisely that. Nokia (India) has been caught doing such over-invoicing by the Income Tax authorities and theEnforcement Directorate and has, therefore, been directed to refund the over-invoiced amount of Rs 3,000 crore along with interest and Rs 500 crore penalty.
Then, there is the important aspect of indigenisation. Many studies have shown that foreign companies do not really manufacture in depth theproducts they produce here. Again, Nokia is a good example. A whole decade after they began “making” handsetsof mobile phones here, the indigenous content was a mere25 percent; 75 percent continues to be imported from Nokia (Finland). This leads to huge recurring outflows of foreign exchange, and also to only a minimal transfer of the so-called high-end technology.In comparison, the far more sophisticated wireless communication sets for the defence services, incorporating truly high-end technology — proprietary microchip-based secrecy and security features totally missing from commercial handsets for civilians — have been designed and developed in India. They are being produced with 90 percent Indian content by a PSU, Bharat Electronics Ltd (BEL).
Finally, there is the matter of exports. One of our leading think tanks, Research and Information System for Developing Countries, brought out a detailed report recently on how the level of exports varied as a function of FDIin companies in some ten economic sectors, including defence products exports. Theexhaustive data and analysis covering the last one decade led to the following conclusion: the higher the percentage of FDI, the lower the percentage of exports in total sales.
I now turn to some specific points made by Shaili Choprain On the defensive for no good reason?(25 May).
Firstly, the article as a whole is massively but wrongly pejorative about the Defence PSUs (DPSUs), e.g., use of terms like “monster” DPSUs; HAL is a “non-performer” etc. Sweeping, unsubstantiated generalisations that are incorrect.
Secondly, latest data from the defence ministryindicate that defence imports, which were around 70 percent a decade ago, have now decreased to around 55 percent.
‘Let
full article-read the link.
Similar threads
