The US wants India to raise its foreign direct investment (FDI) ceiling, especially in the Defence sector.
“If India raises its FDI ceiling to international standards, it would increase commercial incentives to invest,” the US Deputy Secretary of Defence, Dr Ashton B. Carter, said. He was delivering a lecture on ‘Towards a joint vision for US-India Defence cooperation’, organised by the Confederation of Indian Industry. Currently, India limits FDI in the Defence sector to 26 per cent.
The statement comes a day after the Samajwadi Party joined the Left parties in opposing the proposed move to allow FDI in multi-brand retail.
Dr Ashton said offsets could be “tremendously” helpful to growing industry capabilities “if you have the right companies, and the right absorption capacity. If offsets are calibrated correctly, it works,”
He added that these were just two points where change could be a real help to Indian-American Defence co-operation.
On US-India Defence ties, Dr Ashton said, “You are an economic power with an increasing military capability, and your leadership in civil discourse and democracy is critical to political stability of South Asia.”
He said the shared challenge in the next era was to find concrete areas to “step up” Defence co-operation so that only “our imagination and strategic logic, and not administrative barriers, set the pace.”
The visiting dignitary said that Secretary for Defence, Mr Leon Panetta, and he “were committed to reform” the Department of Defence’s internal processes. “India has been very frank in expressing its concerns with US export controls and technology security policies. We are taking real steps to address India’s concerns.”
The Deputy Secretary added that the US was also taking steps to improve foreign military sales (FMS) system. “This is in both our countries’ interests. India was our second largest FMS customer in 2011 with $4.5 billion in sales,” he added.