Wipro’s proposals to design, develop and manufacture defence related software has been questioned by the Indian Foreign Investment Promotion Board (FIPB).
The IT company wants to get into military software that will help with assembly and upgrades of warfare enablers, including strategic communication systems, the design and development of computer-based simulators, radar avionics systems and military control systems, among others.
It’s been advised by the Defence Ministry to seek FIPB permission before it applies for the licence. However, it may have a tough job as according to India’s Business Standard, current FDI rules state that only software companies with 100 percent foreign equity can set up shop in India through an automatic route. There is no clause expressly stopping them from offering software services in the defence arena. Wipro has foreign institutional investments of 9.8 percent.
And just in case this wasn’t complicated enough, a separate rule exists for the FDI in the defence sector where only a 26 percent cap is allowed and subject to industrial licence.
And it seems the FIPB agrees with the confusion as it has now directed Wipro to the Department of Industrial Policy and Promotion, and the Ministry of Defence to make a decision on the issue.
According to the Business Standard this matter has been listed for tomorrow.