Global defence company SAAB has pitched for raising the foreign direct investment (FDI) limit in defence to 49 per cent from the current 26 per cent, if India wants to attract more companies in the sector.

“FDI at 26 per cent does not work. There are very few companies which will be willing to come with technology at 26 per cent. But, if you go up to 49 per cent, there are many countries in Europe, like Sweden, which will not have any restrictions,” Lars-Olof Lindgren, Chairman, Saab India Technologies Pvt Ltd, told Business Line . Saab Technologies is a 100 per-cent subsidiary of SAAB.

Commerce Minister Anand Sharma has also indicated that the Government could consider increasing FDI limit in the defence sector.

Without giving specifics of areas where SAAB will be investing, Lindgren said the company will be interested in setting up production facilities in India.

Adding that the private sector needed to play a much larger role in defence technology in the country, Lindgren said a joint venture with 51 per cent Indian ownership is vastly different from just buying from abroad and doing some production here. “If the technology level should be top notch, which it should be, then I think you have to be more open to foreign investments,” he added.

Lindgren said there will be transfer of defence technology if the FDI ceiling is raised to 49 per cent. “You have not seen it at 26 per cent because you do not feel comfortable enough. You do not feel that you have enough control or say as to how the technology is used. That is why 26 per cent has not worked,” he added.

Lindgren further said, “India has a great need for defence products. You see its strategic position, its location in this area, which is not an easy one from a strategic point of view, and the present state of material in the Army and Air Force – all this shows that India is a country where there must be increased demand for these products.”

> ashwini.phadnis@thehindu.co.in

Related Topics