Stocks of companies related to the defence sector rose sharply by up to 20 per cent today after government notified increase in FDI limit to 49 per cent through approval route in the sector.
Buoyed by the move, shares of Bharat Electronics Ltd zoomed 20 per cent to settle at Rs 2,114.40, while Astra Microwave Products rose by 8.55 per cent to Rs 135.90 on the BSE.
Shares of BEML surged 4.99 per cent to Rs 540.55 -- its upper circuit limit and Pipavav Defence and Offshore Engineering Company was up 0.99 per cent to Rs 46.
The move is aimed at boosting domestic industry of the country which imports up to 70 per cent of its military hardware.
FDI ceiling in the sensitive defence sector has been hiked from current 26 per cent, with the condition that the company seeking permission of the government for FDI up to 49 per cent should be an Indian company owned and controlled by Indians.
Further, foreign direct investment proposals above 49 per cent will have to seek the approval of the Cabinet Committee on Security 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).
