Cabinet nod to FDI in defence, railway infrastructure

Pushing ahead with the reforms agenda, the government today approved raising FDI limit in the defence sector to 49% and opened up the railway infrastructure segment for foreign direct investment. The decisions were taken at the Cabinet meeting headed by Prime Minister Narendra Modi, sources said.

The FDI ceiling in the sensitive defence sector has been hiked to 49% from current 26%, with the condition that control in joint ventures for manufacturing of defence equipment will remain in Indian hands. The move is aimed at boosting the domestic industry, which imports up to 70% of its military hardware.

In relation to the railways, the Cabinet approved allowing 100% FDI in areas such as high-speed train systems, suburban corridors and dedicated freight line projects implemented in PPP mode.

Finance Minister Arun Jaitley in his Budget speech for 2014-15 had announced plans to increase FDI in the defence sector and open up the cash-starved government-owned railways. The Cabinet today gave approval to the announcements made in the Budget.

READ: Is Arun Jaitley's 49% FDI in defence sector enough for India's security?