Finance minister Arun Jaitley has said that reforms should be done in a manner acceptable to the political system and called the decision to raise the foreign direct investment limit in the defence sector to 49% from the existing 26% would help in establishing the indigenous military industry.
“Don’t do reforms in a manner that the political system is unwilling to accept it, otherwise we will face the situation of multi-brand retail,” said Jaitley, who also has additional charge of the defence ministry.
Calling the hike in defence FDI a signifinicant step, Jaitley suggested that any further rise might have created “larger complications domestically.”
“Our assessment of the market is that the 49% FDI limit in the sector, would be a significant step in establishing the domestic defence market…the public opinion and Parliament’s opinion in India is ready to accept the proposal that I have made.. Other proposals may have created larger complications domestically,” Jaitley said in an interview to Headlines Today.
“I would prefer it to be 51% Indian owned. If I can get technology, capital and manufacturing at 51% Indian ownership, I think the public and political opinion would accept that more comfortably,” he said, adding that the government held extensive consultations on the issue with all stakeholders including the defence ministry.
Meanwhile, brushing aside criticism of not having done enough reforms in the budget, Jaitley said this was the beginning and he did all he could do under the given circumstances. “This is the beginning of our journey, not the end. Whatever I could do now, I have done. All decisions are not taken on day one,” Jaitley told Press Trust of India.