India should open up its defense sector only if it gains more access to military technologies currently denied it by several Western governments, a powerful national trade lobby said on July 26.
Global armament firms such as Britain's BAE Systems, Europe's EADS and Lockheed Martin and Sikorsky of the United States have invested in India after New Delhi opened up its defense sector in 2001 to foreign groups.
Foreign capital in joint ventures was limited at 26%, but an Indian parliamentary panel advised the government in 2008 to hike this cap to 49% to spur production.
"The 26% equity has been effective in bringing in big companies," said Amit Mitra, secretary-general of the Federation of Indian Chambers of Commerce and Industry (FICCI). "But if the government raises the cap to 49% then that should be done under a set of conditions," he added.
The trade body explained that if the cap was raised then limits on the transfer of Western technology to India should also be removed.
It said countries such as Germany, China, South Korea and Canada had recently hardened their export rules.
India is among the world's top 10 military spenders with an annual defense budget last year of 1,420 billion rupees (US$31.55 billion.)
It plans to spend $50 billion by 2015 to upgrade its military mainly through imports as local production through collaborations is widely seen as just a drop in the ocean.
The trade body said it also had other proposals for safeguards on foreign partnerships in India's still-nascent defence sector. It said all joint ventures should be managed only by Indian nationals. "We are not talking about the soap-and-detergent industry but a strategic sector that deals with the nation's defende," Mitra said,
The trade lobby, which also has numerous domestic armament manufacturing companies as its partners, said it was calling on New Delhi to streamline its weapons procurement policies to speed up indigenous development.
A string of illegalities in arms contracts dating back to 1984 has led to delays in finalizing major defence deals and made India's political-military establishment wary of new scandals.
The Indian military, the world's fourth largest, say it urgently needs more tanks, warships and artillery, combat helicopters, electronic warfare systems and missiles worth billions of dollars.
Mitra said India's defense procurement policies tend to suffer from the limitations of short-term threat perceptions and do not reflect the "long-term capability required to be developed by the country."
Copyright Agence France-Presse, 2010
