India should open up its defense sector only if it gains more access to military technologies currently denied it by several Western governments, a national trade lobby said July 26.
Global armament firms such as Britain's BAE Systems, Europe's EADS, and Lockheed Martin and Sikorsky of the United States have invested in India after New Delhi opened up its defense sector in 2001 to foreign groups.
Foreign capital in joint ventures was limited at 26 percent, but an Indian parliamentary panel advised the government in 2008 to hike this cap to 49 percent to spur production.
"The 26-percent equity has been effective in bringing in big companies," said Amit Mitra, secretary-general of the Federation of Indian Chambers of Commerce and Industry (FICCI).
"But if the government raises the cap to 49 percent then that should be done under a set of conditions," he added, saying that FICCI would offer its suggestions to the government later July 26.
The trade body explained that if the cap was raised then limits on the transfer of Western technology to India should also be removed.
It said countries such as Germany, China, South Korea and Canada had recently hardened their export rules.
India is among the world's top 10 military spenders with an annual defense budget last year of 1,420 billion rupees ($31.55 billion).
It plans to spend $50 billion by 2015 to upgrade its military mainly through imports as local production through collaborations is widely seen as just a drop in the ocean.