Govt moves to hike def FDI up to 100%



POLITICS & POLICY: Modi Sets Agenda, Considers Bold Moves To Attract Investments Norms For Rlys, E-Commerce, Construction Set To Be Eased

Within two days of taking charge, the Narendra Modi government has begun work on allowing up to 100% foreign investment in defence production, in a bid to send a strong signal to global investors as well as to try and move the pro duction base of some equipment into the country .

The commerce & industry ministry has circulated a cabinet note seeking comments from other government agencies, sources familiar with the development told TOI.

The ministry is also readying other proposals to allow FDI in sectors such as railways, where the list of areas where investment will be allowed is being expanded, according to sources. Earlier, the government had planned to allow FDI in highspeed train systems, suburban corridors, high-speed tracks and freight lines connecting ports and mines.

Similarly , there is a proposal to ease FDI norms in construction.

On Tuesday , Arun Jaitley had spoken of the government's intent to hike the FDI cap in the sector to 100% from 26% at present--a move that has been resisted by the defence ministry for years.

With Jaitley holding both the finance and defence portfolios, opposition may be muted this time. In any case, during his election campaign Modi had announced his support for greater private participation in the defence sector.

The commerce & industry ministry has suggested a graded foreign investment ceiling.
It has suggested a cap of 49% for companies that do not transfer technology , while in ventures where the foreign partner is willing to transfer knowhow, the government intends to allow up to 74% FDI.

There will be no cap (100% FDI) for companies engaged in manufacturing state-of-theart equipment and machinery or those undertaking modernisation projects.

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