Article Posted on : - Aug 07, 2014

NEW DELHI (PTI): Moving ahead with the economic reforms, the Indian Cabinet has cleared the long-delayed proposal for raising FDI limit in defence to 49 per cent for foreign investment.

The decision taken on Wednesday at the Cabinet meeting headed by Prime Minister Narendra Modi here came barely two weeks after the one to raise the cap of FDI in insurance sector from 26 per cent to 49 per cent.

FDI ceiling in the sensitive defence sector has been hiked to 49 per cent from current 26 per cent, with the condition that of the control in joint venture manufacturing defence equipment will remain Indian hands.

The move is aimed at boosting domestic industry of a country which imports up to 70 per cent of its military hardware.

The proposal had been pending for several years as it was first mooted by the Commerce Ministry during the previous UPA government. However, the then Defence Minister A K Antony had blocked it, citing national security concerns.

The NDA government has been arguing that the FDI limit needs to be hiked in defence to help expand the domestic industrial base in the sector.