The government on Saturday said it will relax foreign direct investment norms in defence manufacturing by allowing 74 per cent FDI under the automatic route with a view to attracting overseas players in the sector.
As per the current FDI policy, 100 per cent overseas investments are permitted in the defence industry -- 49 per cent under the automatic route, while beyond that government approval is required.
Finance Minister Nirmala Sitharaman said the FDI limit for the sector under automatic route will be raised from 49 per cent to 74 per cent.
"It will have security clearance and everything else as always," she told reporters here while announcing the fourth tranche of the Rs 20 lakh crore stimulus package for the coronavirus-hit economy.
India's defence industry received FDI of USD 8.82 million (Rs 51.93 crore) during April 2000 and December 2019.
Asked about more details on the revised policy, she said: "The ministry concerned will come up with the details...also notification stating how that is going to work out."
Further, the minister said to improve autonomy, accountability and efficiency in defence supplies, "we intend to corporatise Ordnance Factory Boards."