NEW DELHI: Within two days of taking charge, the Narendra Modi government has begun work on allowing up to 100% foreign investment in defense production, in a bid to send a strong signal to global investors as well as to try and move the production base of some equipment into the country.Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment (FDI) is currently limited in India. For example, the FDI limit in the aviation sector is a maximum of 49%.
The commerce and industry ministry has circulated a Cabinet note seeking comments from other government agencies, sources familiar with the development told TOI.
The ministry is also readying other proposals to allow FDI in sectors such as railways, where the list of areas where investment will be allowed is being expanded, according to sources. Earlier, the government had planned to allow FDI in high-speed train systems, suburban corridors, high-speed tracks and freight lines connecting ports and mines. Similarly, there is a proposal to ease FDI norms in construction.
On Tuesday, Arun Jaitley had spoken of the governmen's intent to hike the FDI cap in the sector to 100% from 26% at present - a move that has been resisted by the defense ministry for years.