Policy & Government

Govt permits up to 74% FDI under automatic route in defence sector

The Department for Promotion of Industry and Internal Trade (DPIIT) on Thursday issued a press note permitting foreign direct investment (FDI) in defence production above 74 per cent on the automatic route. This would be subject to access to modern technology or for ‘other reasons’ that needs to be recorded.

FDI in defence production is automatic upto 74 per cent, the department said. Till now, 100 per cent foreign investments were permitted in the defence industry – 49 per cent under the automatic route and government approval was required beyond that.

The press note has stipulated that foreign investments in the defence sector would be subject to scrutiny on the grounds of national security and the government reserves the right to review any foreign investment in the sector that affects or may affect national security.

As per the Press Note 4 (2020 series), FDI up to 74 per cent under automatic route shall be permitted for companies seeking new industrial licences.

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Source
ET News
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