DPIIT vide Press Note No. 5 of 2016 Series dated 24 June 2016 notified review of Foreign Direct Investment (FDI) Policy on various sectors including which includes conditions related to FDI in defence at Para 5 of the said Press Note. According to the revised guidelines, Foreign Investment Cap upto 49% is allowed through automatic route and beyond 49% under Government route, wherever it is likely to result in access to modern technology or for other reasons to be recorded. The foreign investment in defence sector is further subject to industrial license under the Industries (Development & Regulation Act), 1951. The detailed guidelines in this regard may be seen under the Press Note available at DPIIT website (link, followed by link Acts & Rules).

Ministry of Defence, Department of Defence Production is the Administrative Ministry for grant of extension of Industrial licence under the I(D&R) Act, 1951 to the private sector. The Company may send their IL extension application to Contract Purchase Officer, Department of Defence Production, Ministry of Defence, D(DIP) Section, Sena Bhawan, New Delhi.

As per the FDI statistics available at DIPP’s website, an FDI inflow of $ 5.12 million (INR 25.51 crores) has been received in the country till September 2017 (as per data available on DIPP’s website).

Since May, 2001 after opening the defence production sector for 100% participation in private sector, so far 36 JVs/FDI proposals have been approved for manufacture of wide range of licensable defence items.

The Achievement report of the defence sector covering policy initiatives, R&D and other important areas can be accessed on the link.