Government Considering 100 Per Cent FDI For Defence Sector Under Automatic Route

To attract foreign direct investment (FDI) in the defence sector, the government is considering a more liberal policy, IANS has reported. The new policy will aim to attract Rs 35,000 crore investment in the next five years, enhance defence production in India and create more jobs.

In all likelihood, the government will allow 100 per cent FDI under the automatic route for the production of tanks, armoured vehicles and military transport aircraft in the country. The current FDI regime permits foreign companies to own 49 per cent in Indian defence units through the automatic approval route. By this route, FDI is allowed without prior approval by the government or Reserve Bank of India.

While 76 per cent FDI under the automatic route is proposed for fighter aircraft and helicopters, 51 per cent FDI under the automatic route is proposed for submarines and warships. Discussions are currently on between NITI Aayog, the Defence Ministry and the DIPP.