SJM tells PM Modi not to allow foreign defence firms to register as Indian vendors
The Swadeshi Jagran Manch has pointed out that with the change in investment policy allowing FDI up to 74% under automatic route in defence production, the definition of Indian vendor has been diluted significantlyUpdated: Sep 01, 2020, 23:11 IST
The Swadeshi Jagran Manch has written to Prime Minister Narendra Modi asking him not to allow foreign defence companies to register themselves as Indian vendors by setting up subsidiary companies in India as it would be in contravention of the government’s thrust on self reliance.
An affiliate of the RSS, the Swadeshi Jagran Manch has pointed out that with the change in investment policy allowing FDI up to 74% under automatic route in defence production, the definition of Indian vendor has been diluted significantly
“Swadeshi Jagran Manch is of the considered opinion that ‘Indian vendor’ should only mean 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,” the letter signed by the national co-convenor of the SJM, Ashwani Mahajan said.
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 IDDM (Indian Indigenously Designed Developed and Manufactured)’ categories where special preferences are given to the ‘Indian Vendor’, the letter said.
The SJM which has been in the forefront of seeking a rejig of trade and investment policies and boycott of Chinese products has said that if a foreign company is registered in India, and has started making in India, its technology policy is not governed by Indian laws, they are governed by the laws of country of their origin.
“…All the gains, which were expected by banning of imports of 101 defence items would be squandered away, as foreign companies establishing their units, would be covered by procurement by the government as a domestic company,” the letter said.
In August India announced that it will ban the import of 101 types of weapons and ammunition over the next five years — from artillery guns to light military transport aircraft and conventional submarines to long-range land attack cruise missiles — in a significant step on the long road towards achieving self-reliance in the defence sector.
Mahajan underlined 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.
“We understand that the intent of the Government, so far has been that first preference be given to Indian IDDM, that is, Buy Indian IDDM. Therefore, by any chance companies registered in India but owned by foreigners, shouldn’t be included in this category. Second preference in government procurement should be to Indian companies, namely companies having Indian shareholding of 51 per cent or above. However, if ‘clarification’ is to be believed, in both these categories, foreigners will gain dominance and ‘Self Reliance’ in defence will be a distant dream,” the letter said.