"Though participation of foreign industry is always welcome, we do not want the foreign companies or nations to gain initiation and control over our system. If we allow the controls to be taken over, if we increase the FDI, we have a fear that our indigenous capabilities will be controlled," he said here.
"On a case to case basis, we can allow up to 40-45 per cent. We will not be in a position to go beyond that," said Saraswat, also the Director General of Defence Research and Development Organisation (DRDO).
He was responding to a question by reporters about the Commerce ministry being keen on raising the cap on FDI in the defence sector to at least 41 per cent from the present 26 per cent.
Asked about the unmanned Aerial Vehicle, Saraswat said the Cauvery engine was being modified for integration on this.
On the Light Combat Aircraft (LCA) for the Indian Air Force, he said totally nine aircraft are already flying and 2,000 sorties have been completed.
The Naval variant of the LCA will ski jump from Goa's Shore based Test facility by the end of this year.
Asked about the status of Advanced Medium Combat Aircraft (AMCA), he said the project was very much on.
"Currently, it is in the design stage. A good work is being done. After this we will go to government which will take a year's time'. There are three major technologies along with lot of associated technologies which have to be developed. DRDO was developing this," he said.
They will then approach the government, he said adding no decision had been taken so far on shelling the project by DRDO, HAL or Defence ministry.
The attrition rate at DRDO was less than two per cent. In the last five years we lost only 140 engineers, he said.