Most developed economies are already feeling threatened by increasing equity investments sponsored by foreign government-owned and/ or foreign government-controlled entities in the defence and high-tech industries. A coordinated government response for supervision of foreign investments will emerge on the horizon sooner than later.
Notwithstanding positive developments over the last decade, certain grey areas in industrial licensing and FDI policy need further improvement to facilitate the private sector’s more meaningful participation in the Indian defence industry.
Given the sensitivity attached to defence-related FDI, each investment should be subject to wider review and impact analysis following which the FDI percentage could be determined varying between zero and 100 per cent.
N. S. Sisodia replies: No, Sir.
India’s approach to liberalization has been gradual and measured; and its prudential regulation in the financial sector cautions.
On the whole, our economy and the financial sector remain robust, with the principal challenges being fiscal health and deficient social and economic infrastructure.
While we are not ‘dependent’ on other countries, our measured integration with the global economy has helped our economic growth.
FDI can help provide resources to finance our huge development needs and accelerate growth.
In brief, an open economy with proper regulation, economic reforms which promote inclusive economic growth and resolute efforts for meeting internal challenges on fiscal and social and infrastructural front should keep us financially secure.
FDI in Defence: Lessons for Developing Countries
Most developed economies are already feeling threatened by increasing equity investments sponsored by foreign government-owned and/ or foreign government-controlled entities in the defence and high-tech industries. A coordinated government response for supervision of foreign investments will emerge on the horizon sooner than later.