investments in," said Phil Shaw, chief executive of Lockheed Martin India Pvt Ltd.
"An uplift from 26 to 49 percent maintains the status quo and may not be sufficient incentive to make an investment here."
Lockheed Martin already has a 26 percent investment in an Indian joint venture with Tata Advanced Systems that manufactures airframe components for the C-130J Super Hercules military transport plane.
India's Department of Industrial Policy and Promotion has circulated a discussion document that proposes allowing up to 100 percent foreign direct investment (FDI) in defence production, two government officials told Reuters.
The note suggested allowing 100 percent FDI in manufacturing of state-of-the art equipment, one of the officials said. It also recommends a cap of 49 percent for investments which do not involve transfer technology and a 74 percent ceiling in such cases where the foreign investor is ready to share technology know-how, the official added.
Last week, Commerce and Industry Minister Nirmala Sitharaman said foreign investment in the sector would help increase the defensive preparedness of the country and reduce its dependence on imports, saving billions of dollars in foreign exchange.
However, she said the government was yet to take a final call on increasing the FDI ceiling and the decision would be taken by Jaitley and Modi. The proposals also face pockets of resistance in India's industry, Modi's party and the military establishment.
A.K. Antony, who was India's longest serving defence minister until his Congress party's election defeat in May, said this week that allowing higher foreign investment in defence would be "suicidal".