100% FDI in Defence
Attracting Investments and Cutting-Edge Technology
The Narendra Modi Government has announced that foreign direct investment (FDI) in the defence sector is permitted to 100 per cent level. Till now, the FDI regime permitted 49 per cent FDI participation in the equity of a company under automatic route. Foreign investment beyond 49 per cent 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-the-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 the Arms Act of 1959. It may be recalled that when the FDI in defence was hiked from 26 per cent to 49 per cent when presenting the defence budget for FY 2014-15, that time too the Parliament had approved consideration of FDI in defence beyond 49 per cent on case to case basis where state-of-the-art equipment was involved. However, last year news trickled in that all the cases of FDI in defence were stuck with the Foreign Investment Promotion Board (FIPB) because the Ministry of Defence (MoD) had still not defined what was meant
LT GENERAL P.C. KATOCH (RETD)