THE Modi government has announced another set of sweeping liberalised norms for Foreign Direct Investment (FDI) in various sectors. In the last two years of the Modi government, there has been successive liberalisation of FDI norms across the board. The current relaxations include 100 per cent FDI in the defence sector, retail food trade, civil aviation, cable networks, DTH and other telecom services. Apart from this, 74 percent FDI through the automatic route will be allowed to facilitate takeover of existing Indian pharmaceutical companies. FDI in the private security agencies has been increased from 49 to 74 percent. The provision for local sourcing for single brand retail trading has also been relaxed. Moreover, the FDI in animal husbandry, pisciculture, aquaculture, apiculture which was allowed 100 percent FDI under the automatic route under “controlled conditions”, is now amended to do away with the “controlled conditions”. These measures should be seen as part of the aggressive push for neo-liberal policies combined with the imperatives of becoming a junior strategic partner of the United States of America. This becomes obvious in the way the Modi government has further relaxed the norms for FDI in the defence sector. Foreign investment beyond 49 percent, which was earlier to be permitted by a government approval on a case-to-case basis on the condition that it will result in access to modern and `state-of-art’ technology has now been changed. The condition of access to `state-of-art’ technology has been removed. Despite relaxing the FDI norms in the defence sector two years ago, there has been no investment from foreign firms. The Modi government is keen to attract US weapons manufacturers like Lockheed Martin to India. However, the real issue is not investment of funds but the technology to manufacture in India. No multinational arms company will part with their technology and they fear loss of control of such technology if they locate to India. Unless India becomes a total ally and trusted partner of the US like Israel, there will be no scope for any joint production and technological development. Thus the invitation to western multinational arms companies is not going to work until India becomes a fully subordinate ally like Israel. India has to stop being dependent on costly arms imports which has made India the biggest arms importer in the world. This can be accomplished only by building self-reliance in advanced military technology and defence production capacities. If India can develop space and nuclear technology, there is no reason why it cannot do so in military technology. The latest change in FDI norms show that India is now ready to settle for second best and not the `state-of-art’ technology in its desperate quest for foreign arms companies setting up enterprises in India. Inviting FDI in defence production enterprises is also aimed at setting up a military industrial complex in the country. Increasingly, Indian corporates are entering the defence production sectors like Larsen & Tourbo, Reliance, Tatas and others. The United States will continue to push India to sign more military collaboration agreements like the Communication Interoperability and Security Memorandum Agreement (CISMOA) and Basic Exchange and Cooperation Agreement (BECA) before any tangible joint production prospects emerge. The Modi government has crossed the Rubicon in forging close military cooperation ties with the United States. This is going to have serious repercussions for India’s sovereignty and independent strategic decision making capacity. The decision on furthering FDI in the pharmaceutical sector is equally insidious. Earlier, after allowing 100 percent FDI in greenfield projects, now 74 percent FDI is allowed in existing pharmaceutical companies in the name of upgrading them (brownfield projects). Already there has been a wave of takeovers of Indian companies by foreign drug companies in the past years. India is a major producer of generic drugs. The MNC takeover of the pharmaceutical sector will mean more costly medicines for Indians and for people in the developing countries to whom India has been exporting these medicines. Another retrograde measure is the opening up of the food retail trade to multinational companies. The government has made a major dent for FDI in the retail trade by allowing 100 percent FDI for trading in food products manufactured or produced in India. This includes e-commerce too. Giant trading companies like Walmart and Amazon are poised to enter the retail food market in India with this announcement. This will affect the small food and grocery stores around the country and the livelihood of lakhs of small traders and shopkeepers. In line with its surrenderist approach to national sovereignty, defence and security, the government has facilitated the foreign takeover of the private security industry in the country. FDI in this sector has been increased from 49 to 74 percent. The privatisation drive of internal security is now being taken to the level of foreign security companies dominating the domestic security agencies. The current liberalisation of FDI norms is an admission that in substantial terms no foreign investment in manufacturing and productive sectors has taken place. Much of the foreign investment flows have been through the Mauritius, Singapore and Netherlands route which are not actually investments but financial flows to avail of tax benefits. The Modi government is making desperate efforts to attract FDI by encouraging foreign capital to take over existing productive assets and by compromising on vital sectors affecting national sovereignty like defence. These policies are going to have a ruinous effect on the people and the country. (June 22, 2016)