India hikes defence foreign direct investment cap in fresh reforms

The landmark move aims to reduce India's massive defence import bill.

India on Saturday raised the foreign direct investment (FDI) limit in the sensitive defence sector to 74 per cent from 49 per cent via the automatic route in a long-awaited move seen key to the 'Make in India' initiative effective.
Finance Minister Nirmala Sitharaman said India, the world's third largest military spender, would put out a list of weapons and platforms that will only be purchased from domestic industries. India has set a target of $5 billion for its defence exports in the next five years. The landmark move aims to reduce India's massive defence import bill, the minister said.
Outlining the fourth tranche of the Rs20 trillion fiscal stimulus measures, Sitharaman said she would "focus on eight sectors - coal, minerals defence production, airspace management, aircraft repairs, power distribution companies, space sectors and atomic energy." She said India would soon be easing restrictions on airspace utilisation, currently only at 50 per cent, to reduce cost of flying. As part of the reforms, six more airports would be auctioned to private players.
Sitharaman said India would become a global hub for aircraft maintenance, repair and overhaul. The structural reforms also include a move to link India's robust start-up ecosystem to the nuclear sector.
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