The Department of Industrial Policy and Promotion (DIPP) has notified changes to the foreign direct investment policy for defence approved by the Government earlier.
The foreign direct investment limit has been raised from 26% to 49% but over and above this increased percentage government approval shall be mandatory. Further, it is a composite limit and shall include FDI, FII, Qualified foreign investors, NRI’s, Foreign venture capitalist.
The Government of India feels that it will help and encourage the domestic manufacturing of the defence goods which are imported as of now. It will further reduce the imports and would enhance and revive the domestic manufacturing.
Further,proposals for over Rs. 1200 crore and beyond the limit of 49% would need the approval of Cabinet Committee of Economic Affairs (CCEA).
Overall this would prove as beneficial for the growth of the Indian Economy as the volume of imports would be reduced to a greater extent.
