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  • Govt considers raising FDI limit in defence sector

    Published on February 2, 2011

    To attract foreign manufacturers to invest in India, a group of ministers is considering a proposal to raise Foreign Direct Investment limit in the defence sector to 49 pc from the current 26 percent.

    The Defence Ministry on Tuesday said the proposal mooted by the Commerce Ministry would also help the domestic industry to grow.

    “The Ministry has proposed that the FDI limit should be increased to 49 per cent. That proposal was received by our Ministry and it is under discussion by a group of ministers,” Secretary Defence Production Rajkumar Singh said in New Delhi on Tuesday.

    “It is not a proper EGoM or a GoM. It is a group of only two-three ministers,” Singh said. He, however, declined to name the ministers.

    Recently, the Department of Industrial Policy and Promotion had suggested FDI cap in defence sector to be raised to 74 percent saying 100 percent overseas investment would be desirable.

    Industry chambers have also been demanding increase in foreign investment limit in the defence sector to 49 percent for growth of the domestic industry as foreign companies were also reluctant to invest without getting a significant degree of control in the new entities.

    India is the 10th largest defence spender in the world and depends on over 70 percent imports for its requirement.