The Congress-led UPA Government is reportedly once again looking at the option of hiking the cap on defence FDI through the Foreign Investment Promotion Board (FIPB) route.

According to sources, Boeing Military and other foreign defence companies are currently reluctant to bring their proprietary technology for high-tech weapons or spares into joint ventures in India due to low FDI cap. Sources said foreign companies complained that they would have virtually no control over joint venture at the current limit of 26 per cent.

Speaking on the condition of anonymity, a senior industry ministry official said, "Foreign manufacturers such as Boeing Military, Saab and EADS do not wish to bring their proprietary technology for high-tech weapons or spares into a joint venture in India unless they have a larger say in running the venture."

Local companies like Tata Group, M&M, Reliance and L&T also want the limit on FDI through the FIPB route to be hiked to 49 per cent, but these Indian companies also want the government to ensure that foreign companies share their technology and conduct joint research for future development.

As per rules announced in July this year, FDI of up to 26 per cent will be cleared by the FIPB, while investment proposals beyond this limit has to be placed before the Cabinet. The process of getting cabinet's approval for higher stakes is quite time consuming and cumbersome.

The Indian arms market is expected to reach $100 billion over the next few years.