India To Lift FDI Cap In Defence Sector To 74% Under Automatic Route

In a major policy shift, the Indian government plans to ease foreign investment norms in the defence sector by increasing the FDI limit to 74% under the automatic route for companies holding existing industrial licenses. This reform is expected to attract global defence manufacturers, enhance technology transfer, and strengthen India’s self-reliance in defence production.  

The decision is part of a wider strategy to make India a global hub for defence manufacturing, aligning with the ‘Make in India’ initiative and the country’s growing strategic partnerships.  

Key highlights from the announcement include  

• FDI cap in defence firms with existing licenses to be raised from 49% to 74% under automatic route.  
• Other restrictive conditions that previously deterred foreign investment are also set to be removed.  
• Policy aims to attract global defence players and boost domestic manufacturing.  
• Move expected to enhance technology transfer and reduce import dependency.  
• Reform aligns with India’s goal to become a major defence exporter.  
• Industry experts view the change as a catalyst for deeper global collaboration and capital inflow.  

The easing of FDI norms is likely to accelerate joint ventures, improve supply chain integration, and support India’s ambition to modernize its armed forces with indigenous capabilities.  

Sources: NewsOnAir, NextIAS, Complinity