FDI Cap in Defence Retained at 26%

New Delhi
FDI Cap in Defence Retained at 26%

FDI cap in defence sector will remain at 26 percent and proposals beyond that will be considered by the Cabinet Committee on Security (CCS) on case to case basis.

The Union Cabinet, at a meeting chaired by Prime Minister Manmohan Singh here this evening, decided that FDI proposals in defence sector upto 26 per cent will continue to go through the Foreign Investment Promotion Board (FIPB) route.

This will apply to proposals to the tune of Rs 1200 crore with a cap of 26 per cent, Commerce Minister Anand Sharma told reporters after the Cabinet meeting.

Any proposal beyond Rs 1200 crore, even if less than 26 per cent, will have to be cleared by the Cabinet, he said.

"FDI cap is 26 percent in defence sector that stands like that. Proposals up to 26 per cent will be cleared by the Foreign Investment promotion Board (FIPB) route," Sharma said.

He said proposals beyond 26 per cent would be cleared by the CCS for getting state-of-the-art technology in the military sector.

Sources said the definition of state-of-the-art technology would be determined by the Defence Ministry.

The decision of FDI in defence sector is on the lines of the assertion by Defence Minister A K Antony, who recently wrote to Sharma opposing any move to raise the cap to 49 percent.

Overruling the Commerce Ministry's proposal, Antony had said that "The deliberated view of the defence ministry remains that the FDI cap in the defence manufacturing sector should remain at 26 percent."

At the same time, he had said that whenever FDI beyond 26 percent "is likely to result in access to modern and state-of-the-art technology in the country, decisions can be taken to allow higher FDI on a case to case basis by the Cabinet Committee on Security."

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