Shares of companies related to the defence sector zoomed up to 10 per cent in early trade on Monday after the government said it will relax foreign direct investment norms in defence manufacturing by allowing 74 per cent FDI under the automatic route.
Bucking the overall weak broader market trend, shares of Hindustan Aeronautics jumped 10 per cent, Bharat Electronics rose 5.53 per cent, BEML advanced 5.31 per cent, Astra Microwave Products surged 4.93 per cent and Bharat Dynamics was trading up 4.71 per cent on the BSE.
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 said while announcing the fourth tranche of the Rs 20 lakh crore stimulus package for the coronavirus-hit economy.
Meanwhile, the BSE 30-share index was trading 775.78 points or 2.49 per cent lower at 30,321.95 in early trade.
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