India has allowed up to 74% foreign direct investment in the defence sector through the automatic route—without prior approval of the government. Yet, there’s nothing automatic about it.
The new limit was notified by the Department of Promotion of Industry and Internal Trade, or DPIIT. But it came with multiple conditions.
The investments will be allowed in new ventures operating on licensed segments—or simply, they will require permits.
The higher foreign investment cap requires end-to-end capabilities, starting from design and development to lifecycle support. That’s a continuation of earlier policy that allowed FDI of up to 49%.
The investments are now also subject to security clearance by the Ministry of Home Affairs. While the higher FDI cap allows overseas original equipment makers—or manufacturers—to bring in intellectual property rights and technology, it will also be…