The government today notified increase in foreign direct investment (FDI) limit to 49% from 26% in the defence sector through approval route.
Any company seeking permission from the government for an FDI of up to 49% should be an Indian entity owned and controlled by Indians.
Further, foreign direct investment proposals above 49% will have to seek the approval of the Cabinet Committee on Security (CCS) on "case to case basis, wherever it is likely to result in access to modern and state of the art technology in the country," according to the press note of the Department of Industrial Policy and Promotion (DIPP).
FDI proposals beyond 49% vetted by the CCS need not be cleared by the Cabinet Committee on Economic Affairs (CCEA). So far, all FDI proposals with foreign investments over Rs 12 billion had to be cleared by the CCEA.
It also said that FDI limit of 49% is composite and includes all kinds of foreign investments - FDI, FIIs, FPIs, NRIs, foreign venture capital investors (FVCIs) and qualified foreign investors (QFIs).
However, portfolio investments by FPIs/FIIs/NRIs/QFIs and investments by FVCIs together will not exceed 24% of the total equity of the investee/joint venture company. Portfolio investments will be under automatic route, it added.