Govt eases norms for 100 pc FDI in defence

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SME Times News Bureau | 21 Jun, 2016
The liberalised FDI regime announced on Monday permits Foreign Direct Investment up to 100 percent in defence sector as India looks ahead to increasing indigenous manufacturing in defence under 'Make in India programme", an official statement said.

A statement issued by the Prime Minister's Office said foreign investment beyond 49 percent has now been permitted through "government approval route", and the condition of access to "state of art" technology has been done away with while it still puts a caveat of having access to "modern technology".

The FDI regime so far permitted 49 percent FDI participation in the equity of a company under automatic route, while FDI above 49 per cent was permitted through government approval on case to case basis, wherever it was likely to result in access to modern and "state-of-art" technology in the country.

However, as per the new rules, foreign investment beyond 49 percent will be 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-art' technology in the country has been done away with," the statement said.

FDI limit for defence sector has also been made applicable to manufacturing of small arms and ammunitions covered under Arms Act 1959.