BS reported that the Foreign Investment Promotion Board has rejected a proposal from German firm EADS Deutschland GmbH and Larsen & Toubro for setting up a joint venture company for manufacturing, distribution and marketing of products pertaining to electronic warfare, military avionics, radars and defense related mobile systems. This was done after taking up the matter in six of its previous meetings

As per report FIPB rejected the proposal on recommendations from the Ministry of Defense. The defense ministry did not support it on the ground that the proposal was not in conformity with the sectoral cap of 26% FDI in the defense sector.

In its comments to FIPB, MoD is believed to have said that the foreign partner would be bringing in bargaining power, technology and investments and it would not be easy for the Indian partner to carry forth its views in the day to day functioning of the company.

EADS Deutschland GmbH and L&T had sought FIPB approval in their manufacturing joint venture for bringing in 24.5% foreign equity, amounting to INR 6.12 crore by EADS Deutschland GmbH while 51% equity would be held by L&T Technology. The remaining 24.5% equity would be held by L&T Ltd.

(Sourced from Business Standard)