With an aim to boost job creation in the economy, PM Narendra Modi-led NDA government eased 100% FDI (Foreign Direct Investment) in defence rules through government approval route.
A PMO release said, “Foreign investment beyond 49% has now been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded. The condition of access to ‘state-of-art’ technology in the country has been done away with.”
“FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959,” the release added.
The earlier FDI regime permitted 49% FDI participation in the equity of a company under automatic route. FDI above 49% was permitted through Government approval on case to case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country.
Last year, the government relaxed FDI norms in the defence sector by allowing FDI up to 49 per cent under automatic route and beyond that through the FIPB’s approval.
Although the government had liberalised the FDI cap in the sector, but no major overseas investment has been received in the segment so far.
The move would also help boost the domestic industry which imports up to 70 per cent of its military hardware.
(With inputs from PTI)