Increasing FDI ceiling in the defense sector to 74 per cent via automatic route

On 17 September 2020, the government of India announced a revision of the rules on FDI in the defence sector. While 100% foreign ownership in the sector is allowed as previously, ownership of up to 74% is now allowed under the automatic route, up from 49% previously. Also, foreign investment in the sector is subject to security clearance by the Ministry of Home Affairs as per guidelines of the Ministry of Defence, and a further scrutiny on grounds of national security is reserved for any foreign investment in the sector.

• Type:

  • Entry and establishment (Approval and admission)

• Industry:

  • Manufacturing (Other manufacturing)

• Sources:

  • Ministry of Commerce & Industry, Review of Foreign Direct Investment (FDI) Policy in Defence Sector, https://dipp.gov.in/sites/default/files/pn4-2020_0.PDF, 17 Sep 2020
  • The Economic Times, Govt permits up to 74% FDI under automatic route in defence sector Read more at: https://economictimes.indiatimes.com/news/defence/govt-permits-up-to-74-pc-fdi-under-automatic-route-in-defence-sector, https://economictimes.indiatimes.com/news/defence/govt-permits-up-to-74-pc-fdi-under-automatic-route-in-defence-sector/articleshow/78171788.cms, 17 Sep 2020
  • The Wire, Govt Opens Defence Sector to 74% FDI via Automatic Route, Adds 'National Security' Clause, https://thewire.in/government/defence-national-security-clause-fdi, 10 Sep 2020