New Delhi, July 3: Defence Minister AK Antony has strictly objected to Commerce Minister Anand Sharma's proposal to increase foreign investment from the current limit of 26% to 49%, in the defence sector.
The Defence Minister has argued that "India cannot afford to be dependent on foreign companies and vulnerable to policies of their countries of origin". He also says "Allowing foreign companies to set up manufacturing/ assembly facilities here would be a retrograde step as it will stymie the growth of indigenous design and development."
The Commerce Minister wrote Antony in May, 2013, requesting him to raise the limit on foreign investment to 79 per cent and then he revised this to 49 per cent later.
The Prime Minister and Finance Minister have repeatedly said that they plan to introduce more reforms to boost foreign investor confidence and revive the indolent economy.
Last month, Mr Chidambaram said, "The government is looking at FDI (foreign direct investment) caps to see if they are indeed serving the purpose. Otherwise the caps could be revisited."
In September last year, the Prime Minister's decision to allow foreign super-chains to enter India's vast retail sector forced his government into a minority; Mamata Banerjee withdrew her Trinamool Congress from the ruling coalition in protest against what she described as "an anti-people policy."