INDIA: Government Raises FDI Cap in defense Sector

Friday September 25 2020

The Department for Promotion of Industry and Internal Trade (DPIIT) announced that it has raised the limit of FDI cap in defense sector under the automatic route from 49% to 74%.

FDI up to 74% under automatic route shall be permitted for companies seeking new industrial licenses.

Infusion of fresh foreign investment up to 49%, in a company not seeking industrial license or which already has Government approval for FDI in Defense, shall require mandatory submission of a declaration with the Ministry of Defense in case change in equity/shareholding pattern or transfer of stake by existing investor to new foreign investor for FDI up to 49%, within 30 days of such change. Proposals for raising FDI beyond 49% from such companies will require Government approval.

Current Position:

Sector/Activity: Defense Industry subject to Industrial license under the Industries (Development & Regulation) Act, 1951 and Manufacturing of small arms and ammunition under the Arms Act, 1959

% of Equity/ FDI Cap: 100%

Entry Route: Automatic up to 49%; Government route beyond 49% wherever it is likely to result in access to modern technology or for other reasons to be recorded

Revised Position:

Sector/Activity: Defense Industry subject to Industrial license under the Industries (Development & Regulation) Act, 1951 and Manufacturing of small arms and ammunition under the Arms Act, 1959

% of Equity/ FDI Cap: 100%

Entry Route: Automatic up to 74%; Government route beyond 74% wherever it is likely to result in access to modern technology or for other reasons to be recorded

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