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Central govt increases FDI limit in defence sector under automatic route

Friday, 18 Sep 2020
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The Central government has increased the foreign direct investment (FDI) limit in the defence sector from 49 percent to 74 percent under automatic route and beyond 74 percent through the government route.

Now FDI is allowed up to 74 percent through automatic route and beyond 74 percent to be permitted through government route. This will enhance Ease of Doing Business and contribute to growth of investment, income and employment.

Foreign investments in the defence sector will be subject to scrutiny on grounds of National Security. In line with the collective vision of Aatmanirbhar Bharat Mission, amendments will enhance self-reliance in defence production, while keeping national interests and security paramount.

The government, in its order, said that FDI up to 74 percent under automatic route will be permitted for companies seeking new industrial licences.

The investee company should be structured to be self-sufficient in areas of product design and development.

The investee/joint venture company along with manufacturing facility should also have maintenance and life cycle support facility of the product being manufactured in India.

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