Paragraph 5.2.6 Defence
- Text as on
- As issued 15 October 2020; Press Notes since are not applied
5.2.6 DEFENCE
Sector/Activity % of Equity/ Entry Route FDI Cap 5.2.6.1 Automatic up to Defence Industry subject to Industrial license under 100% 74% the Industries (Development & Regulation) Act, 1951 and Manufacturing of small arms and Government ammunition under the Arms Act, 1959 route beyond 74%
wherever it is likely to result in access to modern technology or for
other reasons to be recorded
5.2.6.2 OTHER CONDITIONS
(i) FDI up to 74% under automatic route shall be permitted for companies seeking new
industrial licenses.
(ii) Infusion of fresh foreign investment up to 49%, in a company not seeking industrial license
or which already has Government approval for FDI in Defence, shall require mandatory submission of a declaration with the Ministry of Defence in case change in equity /shareholding pattern or transfer of stake by existing investor to new foreign investor for FDI up to 49%, within 30 days of such change. Proposal for raising FDI beyond 49% from such companies will require Government approval.
(iii) Licence applications will be considered by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry, in consultation with Ministry of Defence and Ministry of External Affairs.
(iv) Foreign investment in the sector is subject to security clearance by the Ministry of Home Affairs and as per guidelines of the Ministry of Defence.
(v) Investee company should be structured to be self-sufficient in the areas of product design and development. The investee/joint venture company along with the manufacturing facility, should also have maintenance and life cycle support facility of the product being manufactured in India.
(vi) Foreign Investments in the Defence Sector shall be subject to scrutiny on grounds of National Security and Government reserves the right to review any foreign investment in the Defence Sector that affects or may affect national security.
SERVICES SECTOR