The government has approved the long-delayed proposal for raising the foreign direct investment limit (FDI) in the sensitive defence sector to 49% from 26% and opened up the railway infrastructure segment to foreign firms. The decision to hike FDI was taken in a cabinet meeting which was headed by Prime Minister Narendra Modi.
To expand the domestic industrial base in defensive sector, the cabinet hiked FDI ceiling to 49 percent ensuring control in Indian hands, for boosting country’s defence sector which imports up to 70 percent of its military hardware. Further, the cabinet also decided that FDI beyond 49% will be allowed in state-of-the art defence equipment manufacturing, with technology transfer under Indian control and management.
Further, in order to fast-track modernization of the state-run transporter, the cabinet allowed 100% foreign participation in crucial infrastructure segments of the Railways. Foreign investors can now invest in setting up of high-speed corridors, suburban rail networks, signaling projects, logistic hubs and in creating links to industrial parks. Currently, there is a complete restriction on any kind of FDI in the Railways sector except mass rapid transport systems. The move is likely to help in modernisation and expansion of the Railways which is facing a cash-crunch of around Rs 26,000 crore. However, FDI is not allowed in train operations and safety.
FDI is considered crucial for economic development of a country and to attract maximum FDI into the country, the government has been liberalizing the foreign investment policy. It has relaxed FDI norms in around 12 sectors which include telecom, tea, pension and petroleum and natural gas among others. Recently, the government has enhanced FDI in insurance sector from 26 percent to 49 percent.
To expand the domestic industrial base in defensive sector, the cabinet hiked FDI ceiling to 49 percent ensuring control in Indian hands, for boosting country’s defence sector which imports up to 70 percent of its military hardware. Further, the cabinet also decided that FDI beyond 49% will be allowed in state-of-the art defence equipment manufacturing, with technology transfer under Indian control and management.
Further, in order to fast-track modernization of the state-run transporter, the cabinet allowed 100% foreign participation in crucial infrastructure segments of the Railways. Foreign investors can now invest in setting up of high-speed corridors, suburban rail networks, signaling projects, logistic hubs and in creating links to industrial parks. Currently, there is a complete restriction on any kind of FDI in the Railways sector except mass rapid transport systems. The move is likely to help in modernisation and expansion of the Railways which is facing a cash-crunch of around Rs 26,000 crore. However, FDI is not allowed in train operations and safety.
FDI is considered crucial for economic development of a country and to attract maximum FDI into the country, the government has been liberalizing the foreign investment policy. It has relaxed FDI norms in around 12 sectors which include telecom, tea, pension and petroleum and natural gas among others. Recently, the government has enhanced FDI in insurance sector from 26 percent to 49 percent.
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