Conflict of Interest In DCNS 100 Per cent FDI Proposal To India: Defense Ministry

French DCNS’ proposal for 100 percent foreign Direct Investment (FDI) in India for introducing new submarine technology and establish a fully-owned subsidiary in India has hit a roadblock after the Indian defense ministry rejected it.

The MoD sees a ‘conflict of interest’ in the DCNS proposal. Under the proposal, that has been deferred by the Foreign Investment Promotion Board (FIPB), DCNS said it plans to develop a technology used for submarines – Air Independent Propulsion or AIP – that enables them to stay underwater for a longer period without coming out for charging batteries, BusinessLine reported Friday.

The government does not consider AIP to be a new technology.

This is because, the company is already using this technology in collaboration with Defence Research Development Organisation (DRDO) in developing the Scorpene-class submarines with Mazagon Dock Ltd (MDL), officials said.

“The FDI policy in defence clearly states that 100 per cent will be allowed only when a firm is bringing in modern technology — something that has not been used before. This is already been developed with DRDO. There is a clear conflict of interest here,” a top Defence Ministry official told BuisnessLine, requesting anonymity.

The FIPB has already deferred the proposal in June, asking the company to furnish more details on the technology.

But the Ministry seems to have applied its brakes on the proposal, saying that this is not a new technology.

The DRDO-developed AIP will be fitted into the last two of the six Scorpene P-75 submarines being built under technology transfer at MDL for the Indian Navy.