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DIPP releases press note on defence FDI; okays 49% via FIPB

Foreign investment will be allowed through the FIPB route and foreign institutional investors (FIIs) will also be allowed to invest.

The Department of Industrial Policy and Promotion (DIPP) has released a press note on defence FDI. Foreign investment will be allowed through the FIPB route and foreign institutional investors (FIIs) will also be allowed to invest.

It has notified increase in foreign direct investment (FDI) limit to 49 percent through approval route in the defence sector. FDI ceiling in the sensitive defence sector has been raised from current 26 percent to 49 percent. However, the caveat is that company seeking permission of the government for FDI up to 49 percent should be an Indian company owned and controlled by Indians.

According to the DIPP press note, foreign direct investment proposals above 49 percent will have to ask for Cabinet Committee on Security’s permission depending on wherever it is likely to result in access to modern and state of the art technology in the country.

Further, the FDI limit of 49 percent is composite and includes all kinds of foreign investments – FDI, FIIs, FPIs, NRIs, foreign venture capital investors (FVCIs) and
qualified foreign investors (QFIs).

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