In May, 2001, the Defence Industry sector, which was hitherto reserved for the public sector, was opened upto 100% for Indian private sector participation, with Foreign Direct Investment (FDI) upto 26% both subject to licensing.  Further, Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry vide Press Note No. 5 (2016 Series), has allowed FDI under automatic route upto 49% and above 49% through government route wherever it is likely to result in access to modern technology or for other reasons to be recorded.  Further, FDI in defence industry sector is subject to industrial license under Industries (Development & Regulation) Act, 1951 and manufacturing of small arms and ammunition under the Arms Act, 1959. As per the data furnished by 37 companies operating in Defence and Aerospace sector, so far, FDI inflows of over ₹ 1561 Crores have been reported in defence and aerospace sector after 2014 in automatic route.

This information was given by Raksha Rajya Mantri Shri Shripad Naik in a written reply to Shri Prashanta Nanda in Rajya Sabha today.

ABB/SS/Nampi/DK/Savvy/ADA

Foreign direct investment in defence allowed under automatic route to prescribed cap; higher inflows via government route for technology access The defence sector's FDI policy permits investment under an automatic route up to forty nine percent and allows higher foreign investment via the government route where it secures access to modern technology or other recorded reasons; such investment remains subject to industrial licence requirements under the Industries (Development & Regulation) Act, 1951, and manufacturing of small arms and ammunition is governed by the Arms Act, 1959.