Govt puts national security clause in defence FDI hike to 74 per cent

The new policy increasing the cap of foreign direct investment through automatic approval in the defence sector from 49 per cent to 74 per cent now has a ‘National Security’ clause as a condition. The policy was approved by the Union Cabinet on Tuesday and according to the sources the new condition has been proposed by ministry of commerce and industry to the new condition, foreign investment in the defence sector shall be a subject of scrutiny on ground for national security and the government reserves the right to review the investment. Under the existing policy, the defence industry can bring Foreign investment up to 45% automatic route, and above it “under government route, wherever it is likely to result in access to new technology or for other reasons to be recorded”.