| Date: |
25-06-2011 |
| Subject: |
ASSOCHAM Calls For Setting Up Defense SEZ |
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Industry body ASSOCHAM today called for raising the permissible limit on foreign direct investments in strategic defense sector from 26% to 49% for better technology transfers and building domestic capabilities.
The Associated Chambers of Commerce and Industry of India said that the government should also support setting up defense special economic zones to help create an industrial ecosystem for strengthening manufacturing activities in the country.
It said that “Incentives may also be given to establishments in such SEZs to boost export to neighboring countries.”
The large defense purchase orders and contracts to foreign original equipment manufacturers have created large offset obligations, churning out huge business opportunities for small and medium enterprises. Offset obligations worth INR 150,000 crore are to be fulfilled in the next five to six years.
The government may consider an option of providing 25 to 30% reservation to SMEs in defense orders, said vice admiral (retd) PC Bhasin who is chairperson of ASSOCHAM national defense council.
Cluster development on public private partnership model with focus on defense, electronics and homeland security manufacturing of equipment and components should be pursued. He added that “A dedicated fund of INR 400 crore may be created to support research and development work by the private sector.”
ASSOCHAM secretary general Mr DS Rawat called for close coordination between the ministry of defense and other ministries like that of communications and information technology which is also making a serious effort in expanding the manufacturing base.
He said raising the FDI limit in defense sector to 49% will allow foreign firms a larger share of risks and profits, and the confidence to transfer sensitive technologies to joint ventures in India.
ASSOCHAM also proposed infrastructure sharing for developing innovative technologies and select products between the Defense Research and Development Organisation and the private sector.
Source : steelguru.com
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