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FDI changes in Defence Sector under Economic Package announced by Union FM May, 2020

Prime Minister Shri Narendra Modi announced Rs 20 lakh crore fiscal stimulus equivalent to 10 per cent of India’s GDP to deal with COVID-19 situation in the country, the Union Finance Minister NirmalaSitharaman announced the following changes in the Defence Sector to promote the motto of Self Reliant India and boost the economic status of the Country.

Liberalization and other reforms in Defence sector

  • With a view to attract foreign investments, Foreign Direct Investment (FDI) in defence manufacturing under automatic route is being raised to 74 per cent from the existing 49 per cent. FDI under the automatic route excludes investment by China and other nations that share a border with India, after the government amended FDI policy last month. Also, in order to ensure time bound procurement process for defence, project management units will be set up to support contract management, qualitative requirements and trial and testing procedures of weapons/platforms.
  • Import of specific weapons/weapons platforms will be banned in order to boost “Make in India”, which will help reduce the defence import bill as well as provide employment, the government said. The list of the weapons and platforms banned for import will be notified.
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