The government has raised investment cap in defence sector via the automatic route to 74% for companies looking for new industrial licenses. And further from here they will need approval beforehand. The decision has been take to boost FDI in defence.
Further as per the notification by DPIIT, for foreign investments into the defence sector there shall be scrutiny with respect to national security.
While making announcement as part of the relief package, FM Nirmala Sitharaman indicated that FDI in defence manufacturing space can be raise under the automatic route. As per the Department for Promotion of Industry and Internal Trade there has been received FDI equity inflow of USD 9.52 million (Rs 56.88 crore).
What is FDI under the automatic route?
Under the automatic route, after the foreign investment into the particular sector it has to be notified with the RBI.