General Awareness

April 04, 2017 @ 01:15 PM

April 04, 2017 @ 01:15 PM

K. J. Somaiya Institute of Management Studies and Research, Mumbai

9 Easy Steps to register for SIMSR (Infographic)

Download Now

FDI in Defence: Step Towards Self Reliance Or Retrograde

Published : Friday, 25 July, 2014 11:18 AM
  
MBA aspirants must be updated with General Awareness on current topics. General awareness topics with analytically drawn conclusions will benefit you in Essay writing  / GD & PI. Today, you will read General Awareness Topic: 
 
FDI in Defence: Step Towards Self Reliance Or Retrograde 
 
Defence is considered as one of the most strategic industry for any country as it is responsible for maintaining its security. It is because of this reason several experts oppose foreign direct investment (FDI) in defence on the grounds that it will put the security of country in the hands of a foreign company and its host country. Moreover, allowing foreign companies to set up manufacturing or assembly facilities in India would be a retrograde step as it will stymie the growth of indigenous capability, instead of making India self-reliant, it will be fully dependent on foreign companies.
 
As a humble beginning in May 2001, the defence industry was thrown open to the private sector. Then National Democratic Alliance government decided to open the sector with 26 per cent FDI after the Kargil war. 
 
During the war, ammunition and spare parts were in short supply due to international restrictions on selling arms while hostilities are on. Since then, Larsen & Toubro, Mahindra and Reliance have entered the sector. Except for Pipavav Defence, which builds ships for the navy and coast guard, and Larsen & Toubro which builds critical components for missile systems, no private Indian company has made significant progress in the defence business.
 
Despite the opening of defence, virtually no FDI proposal was received by India till 2004. Between 2004 -14, FDI received by India in defence manufacturing amounted to the meagre of USD 4.94 billion out of the USD 322 billion FDI inflow. This tilted the debate of FDI in defence in the favour of opponents of FDI and it was demanded to keep importing crucial defence equipments till indigenous industry acquired the capability of producing them by replication which is often called as reverse engineering.
 
By virtue of reverse engineering, Indian scientists have been able to produce some high end products but it took such a long time that their products become obsolete by the time they are developed and delivered. 
 
Light Combat Aircraft (LCA) project, renamed as Tejas was started in 1983 and it is yet to be inducted in Indian Air Force (IAF). In 1990, it was believed that defence imports would be reduced from 70 per cent to 30 per cent within a period of ten years as the domestic industry will develop. However, after two decades, imports rose to 75 per cent.
 
On the other hand, the proponents of FDI believe that opening up of defence for foreign investment will help in making India self reliant in production of defence equipments. There are nine defence public sector undertakings and 39 Ordnance Factories under the Ministry of Defence. But despite getting preferential treatment by their ministry, they all have failed to keep pace with technological developments and have developed no indigenous competence at all.
 
Currently, India is procuring almost all critical weapon systems that are produced or integrated abroad. It is beyond logic that the security of the country would get threatened if the same weapon systems are produced or integrated in India. 
 
As a matter of fact, indigenous production will also insulate India from unilateral imposition of embargos on contracted supplies by foreign governments. Supply assurance from indigenous facilities will always be significantly more than dependence on imports. Additionally, indigenous manufacturing facilities will also ensure better life-time support including supply of spares.
 
Though opening of defence for foreign investment will not guarantee a self reliance, but past experiences suggest that keeping the doors for foreign investment close will definitely keep India dependent on imports. So, as an important development in Budget 2014-15, Union Finance Minister Arun Jaitely increased the FDI limit to 49 percent. India is the largest buyer of defence equipment in the world and its domestic manufacturing capacities are still at a nascent stage. 
 
The country meets a substantial part of its defence requirements by buying directly from foreign players. As the purchase of technologies under ‘Buy and Make’ route from these players had failed to ensure infusion of meaningful technologies, asking these players to produce in India will be a cautious step towards self reliance. 
 
 
 
Stay informed, Stay ahead and stay inspired with MBA Rendezvous

Crucial Dates, You Should not Miss

Manav Rachna International Institute
of Research

Admissions Open for all MBA programme at Manav Rachna International Institute of
Research and Studies.
CII School of Logistics Amity University, Delhi and Mumbai
Admissions Open at CII School of Logistics Delhi and Mumbai campus, Apply Now!
GITAM School of International Business, Visakhapatnam
Admissions open for MBA programmes at GITAM. Application Deadline is February 20, 2018
XIME
Application Last Date for Online Submission - February 25, 2018
TAPMI, Manipal
Last date extended to 11 February, 2018. Apply Now.
BIMTECH, Greater Noida
Admissions open at BIMTECH, Greater Noida
Lal Bahadur Shastri Institute of Management
Admissions are Open at LBSIM, Delhi. Apply Now !
FORE School of Management
Apply for PGDM & PGDM-IB Programmes. Application Deadline is January 18, 2018.
MDI Murshidabad
Applications for PGPM 2018-20 at MDI Murshidabad are open
NIRMA
Last Date to Apply for MBA (Full Time) Programme at NIRMA is January 29, 2018
Institute of Public Enterprise, Hyderabad
Last Date to Apply for IPE, Hyderabad is 21st January, 2018
IMI New Delhi
Admissions Reopened for PGDM Last Date to Apply January 21, 2018
Application closes on February 12, 2018 for Executive PGDM at IMI
Institute of Rural Management Anand
IRMASAT will be conducted on February 4,2018, Apply Before January 20,2018
ICFAI Business School
Admissions Open at ICFAI Business School Apply Now!
K J Somaiya Institute of Management Studies & Research, Mumbai
Last date for Application is 31st Jan, 2018
SDMIMD Mysore
Application for PGDM 2018-20 at SDMIMD is open till February 28, 2018
img

Admission Open Now

Following Colleges are accepting applications.

INTERNATIONAL MANAGEMENT INSTITUTE

Admissions open for 2018-20

PGDM, PGDM (HRM), PGDM(B & FS), Executive PGDM

Apply Online
Get Connected with your Dream College  
Get Connected with your Dream College

Thank you