The Department of Industrial Promotion and Policy (DIPP) said that it wants to resurrect the debate regarding the increase in the foreign direct investment (FDI) in Indian defense sector particularly in the equipments.

The whole issue reignited after the Commerce Ministry came out with a white paper. In it, the ministry had proposed that the current FDI level in the defense sector be increased to 74 per cent.

It said that most of the investment should be allowed in the filed of production. This, said the ministry, will allow increasing transfer of technological know-how along with more production capacities.

In case this happens, then India will have to reduce the import of defense equipments from outside, which costs it $8 billion.

The paper has come out after the Defense Ministry opposed any such proposal which was put forward by the Commerce Ministry along with many existing domestic players. Security was cited as the reason for this refusal.

Answering such concerns, the paper said that the effective checks-and-balances are needed to see that any unwanted incident(s) does not happen.

At present the defense production segment is allowed to have 26 per cent of FDI.