FDI in Defence Sector Amendment Approved By Union Government
Government of India has increased the limit of foreign direct Invetment (FDI) in defence sector to 74%. Department for Promotion of Industry and Internal Trade (DPIIT) made announcement of this new amendment.
Indian Government has already allowed 100% foreign investments in defence sector of the country. It was further divided into two parts:
- Investment through automatic route
- Through governments approvals
According to earlier rules, 49 % of FDI was through automatic route while 49% was allowed through approval from Government of India. After this amendment now automatic route share is increased to 74%.
Impact of Policy of FDI in Defence Sector
The aim behind this amendment is to make India self-Reliant in defence procurement. India is expected to become hub if defence sector and exports will increase. It will also attract more investors to India. India is at second position in world in terms of armed force. The budget allocated to Indian defence sector is third largest in world. This new move will definitely help India’s requirements.
What is FDI
Foreign Direct Investment or abbreviated as FDI is the kind of investment where a foreign company or entity may directly collaborate with a business such as mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans. It was introduced in India in 1991 under the Foreign Exchange Management Act (FEMA) implemented. Then finance minister, Dr. Manmohan Sign brought it in India.
