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Far too sensitive to indulge in FDI hikes

 MPost |  2013-07-09 14:33:32.0  |  New Delhi

The union home ministry is right to register concern over the recent claim made by the commerce minister Anand Sharma that India would be looking at raising the cap on FDI hike in sectors as sensitive and vulnerable to external threats as defence, space and telecom. While flow of funds is much required in these three sectors, it is equally important to remember that opening the floodgates of foreign direct investment in these areas makes them extremely susceptible to being manipulated by other powers, and is likely to jeopardise the country’s security. The Indian subcontinent rests in a vortex of instability, stricken by terrorism and serious security lapses, and our country is ringed by neighbours that have, time and again, tried to breach the fortress. Far too many parties have interests in destabilising, or at least dictating the trends of, our defence and space exploration sectors, while telecom, too, could be the gateway for snooping at a gigantic scale. Countries like China, Pakistan, Bangladesh, Saudi Arabia, Indonesia, although, interested in investing in our defence, space and telecom sectors, nevertheless, need to be thoroughly scrutinised for their motives, superficial and immediate, or real and long-term, to capture the vast and vulnerable Indian market. The department of industrial policy and promotion, therefore, needs to carefully weigh in the pros and cons of hiking the cap on FDI in these sensitive sectors, and provision to obtain a security licence must be made mandatory for all foreign players in these areas. Although it is true that India banks a lot on foreign-made arms and ammunitions, combat vehicles, tanks and aircraft carriers, and that it has been importing these from Russia, Europe, America for ages, at no other point of time has been the domestic sectors as susceptible to the tugs from afar, that might strike at the foundations of our indigenous industries.


Too many factors are involved in the decision of limiting the FDI in these delicate industries, particularly in the light of revelations on large-scale industrial and intergovernmental surveillance that has been carried out by Western powers, particularly the USA. Every national player in the global defence, space and telecom market is at the mercy of its big corporate lobbies, that seek to monetise and privatise crucial state concerns such as security, telecom and research and development. This is not exactly in the same league as FDI in multibrand retail, which had been hiked in September last year to 49 per cent, and discussions are on to further raise it to about 74 per cent. However, sectors such as pharmaceuticals, mining, small and medium level enterprises among others need some element of state protection so as to give the domestic players some leverage and shield them from the ravages of transnational corporations. In sectors as easily disturbed as defence and space exploration, where humongous investment goes hand in hand with extreme caution, the decision to allow more FDI could very well end up giving the government more headaches than actual aid. Also, foreign conglomerates have been caught red-handed conniving with powerful states fanning civil wars and strifes in regions. It is therefore, only pertinent that the home ministry should express reservations on hiking the cap on FDI in these crucial and sensitive sectors.              

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