<div><p>India has rejected a proposed tie-up between its biggest defence contractor, Larsen & Toubro, and Franco-German aerospace and defence group EADS, a spokesman for the Indian firm said on Thursday.</p><p>EADS and L&T had planned to form a joint venture to supply electronic warfare systems, avionics and radars, but it was rejected because it would exceed caps on foreign investment.</p><p>L&T spokesman Deepak Morada said: "I can confirm that the FIPB (Foreign Investment Promotion Board) rejected the proposal."</p><p>Morada also confirmed that the rejection was due to the proposal not adhering to the 26 percent upper limit prescribed for foreign direct investment in companies in the defence sector.</p><p>Asked whether L&T would re-submit the proposal with new holding ratios or with a new partner, Morada said: "We would not like to discuss these issues in the media."</p><p>The government's refusal to allow the EADS-L&T joint venture has drawn criticism from industry circles.</p><p>Amit Mitra, the secretary general of the Federation of Indian Chambers of Commerce and Industry, argued that the limits on foreign ownership should be raised.</p><p>"(The defence sector) could be the next sector of massive growth, but foreign participation is necessary," Mitra told the Financial Times in comments published Thursday.</p><p>India has a five-year military procurement budget of 30 billion dollars, which is an all-time high as the government overhauls the country's hardware.</p><p>BAE Systems of Britain also had to redraw plans for a joint venture to supply armoured vehicles in partnership with Indian carmaker Mahindra & Mahindra.</p><p>It had initially sought a 49-percent stake in the joint venture.</p><p>The FIPB this week approved a revised split of 26 per cent for BAE and 74 per cent for Mahindra, the Financial Times report said.</p><img src="http://admatch-syndication.mochila.com/images/ad.gif?aid=64665699&bid=informcom" /></div><div id="copyright"><div>

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