Insights
FDI in defence
September 18, 2020Introduction
The Government of India on September 17, 2020 issued Press Note No. 4 of 2020 (“PN4”) revising the Foreign Direct Investment (“FDI”) policy governing the Defence sector. PN 4 contains the landmark decision to allow upto 74% FDI under the automatic route, announced by the Finance Minister in May, 2020 as a part of the Government’s economic package to stimulate the economy.
Erstwhile Policy
The earlier policy permitted Foreign Investment upto 49% under the automatic route in the Defence sector, and any Foreign Investment greater than 49% required Government approval. Further, where the proposed investment was to result in a “change in the ownership pattern” or involved a “transfer of stake by existing investor to new foreign investor”, Government approval was mandatory.
