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


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