Defence sector in focus post getting approval to increase FDI limit to 74 per cent

Nowadays, the Indian Defence sector has remained in focus due to various government initiatives like a rise in foreign direct investment (FDI) limit, import ban on 101 items and stake sell by the government.

In today’s trading session, stocks of the defence sector are trading in the green as the government has given permission to increase the FDI limit to 74 per cent via automatic route.

Under this announcement, the FDI limit for defence has been increased to 74 per cent, which was earlier 49 per cent. In May 2020, Nirmala Sitharaman had announced that the government is planning to raise FDI limit to 74 per cent. She had stated that going forward, there will be indigenisation of some imported spares, and separate budget provisioning for domestic capital procurement will be done. This will reduce the huge defence import bill.

Also, earlier in August 2020, Defence Minister has made an announcement regarding the import ban on 101 defence items to boost the defence sector. This move would give room to local manufacturers as the supply would be provided by them. Also, to meet such rising demand, new manufactures would also jump in this field.