New Delhi, June 3
Defence Minister AK Antony has ticked off Commerce Minister Anand Sharma for his persistence in demanding increased foreign participation in defence manufacturing.

Antony, who has been holding the defence portfolio for the past seven years, has warned against raising foreign participation beyond the present level saying it will increase our dependence on foreign countries.

Antony, with a stated goal of seeing a 'made in India' stamp on defence equipment, in a letter written to Anand Sharma on July 1, categorically rejected the demand to ramp up foreign investment in defence production. The Commerce Minister had demanded the limit on foreign direct investment (FDI) be raised from the existing cap of 26 per cent to 49 per cent in defence manufacturing ventures.

Rejecting the proposal, Antony said: "In the field of defence, we cannot, over the long term, afford to be dependent on foreign companies and vulnerable to policies of their countries of origin."

The Ministry of Defence has been encouraging companies to get into design and development of modern weapon systems. Antony said allowing foreign companies to set up manufacturing facilities would be "retrograde step".

Explaining this to the Commerce Minister, Antony said: "Allowing foreign companies to set up manufacturing/ assembly facilities here will be a retrograde step as it will stymie the growth of indigenous design and development, and our dependence on foreign countries for modern weapons will get perpetuated".

"The deliberated view of the Ministry of Defence, therefore, remains that the FDI cap in the defence manufacturing sector should remain at 26 per cent. However, wherever the FDI beyond 26 per cent is likely to result in access to modern and state-of-the-art technology into the country, decisions can be taken to allow higher FDI on a case-to-case basis by the Cabinet Committee on Security.

So far, two cases like this have been allowed: one is the BrahMos cruise missile in which India has 50.5 per cent stake and Russia has a 49.5 per cent stake. The other case is of the multi-role transport aircraft, which is the joint venture between India and Russia.