The Swadeshi Jagran Manch (SJM) in a letter has urged the Prime Minister to revise the definition of “Indian vendor” in so that foreign investors do not end up filling up the space for Indian players in defense sector by using FDI.
Swadeshi Jagran Manch national co-convenor Ashwin Mahajan in his letter addressed to the Prime Minister, pointed out that after change in investment policies which have allowed 74% FDI through automatic route, companies based in India could be owned by foreign nationals. This, the SJM says, has diluted the very definition of “Indian vendor.”
In his letter, Mahajan said that companies owned by foreigners would start getting the same benifits as Indian vendors, unless the defination is not revised in a way where it becomes compulsory for the majority owner to be an Indian citizen to get the classification.
“Swadeshi Jagran Manch is of the considered opinion that ‘Indian vendor’ should only means an entity in which majority ownership and control is retained by Indian Resident Citizens. Diluting the definition of ‘Indian vendor’ will be a deadly blow to Indian Defence Industry. It would cause a severe blow to the existence of the domestic defence industry, both big and small which has developed indigenously, as foreign companies would start getting same treatment, which domestic industry gets especially under ‘Buy Indian (IDDM)’ and ‘Buy Indian’ categories where special preferences are given to the ‘Indian Vendor,'” the letter says.
“More importantly, dream of self-reliance in defence production, which is so close to your heart, itself will die down,” it adds.
The letter then says that procuring from companies with foreign owners is as good as importing. “We are of the considered opinion that procurement from companies registered in India, where majority shareholding is that of foreigners, is no different from imports, as they would be either importing their components from foreign destinations or would be contracting with companies of their choice, with little chance of developing domestic capabilities.”
The letter further says that preference should be given to companies where majority of the shareholding is with Indian citizens. It says says that unless the defination of the” Indian vendor “is revised, the idea of a self reliant India in defense will remain a distant dream.
Recently Defense minister Rajnath Singh made his intentions of cutting down India’s dependence on foreign companies in defense sector clear. However, with 74% FDI investment through automatics route now permissible, it is possible for India based companies to be owned by foreigners and this is what’s getting SJM worried.