The Reserve Bank of India has notified the government's decision to increase foreign investment ceiling in defence sector and of permitting 100% FDI in railways infrastructure. After assuming power, the NDA government has reviewed Foreign Direct Investment (FDI) policy for railways sector as well as defence.
While, the government permitted 100% FDI in railway infrastructure sector under the automatic route subject to conditions, in defense sector, it has permitted foreign investment (FDI, FIIs, RFPIs, NRIs, FVCIs and QFIs) up to 49% under government route (FIPB).
The earlier cap for the sector was at 26%. As per the revised policy for defense sector, portfolio investment (RFPI/FII/NRI/QFI) and FVCI investment will not exceed 24% of the total equity of the investee company.
Meanwhile, as per the policy for railway sector, FDI beyond 49% of the equity of the investee company in sensitive areas from security point of view will be brought before the Cabinet Committee on Security (CCS) for consideration on a case to case basis.