NEW DELHI, May 30 (PTI) � In a major policy initiative, the Government is proposing to raise FDI in Defence sector to 100 per cent through the approval route.
�The Commerce and Industry Ministry has circulated a Cabinet note for inter-ministerial consultation,� sources told PTI.
The proposal to raise FDI cap in Defence from 26 per cent to 100 per cent is aimed at giving a boost to the manufacturing activities.
As per the 15-page Cabinet note, which was circulated today, portfolio investors, including FIIs, would be permitted to invest only up to 49 per cent.
Further, the note said that a foreign company can even take over a domestic entity provided it brings in state-of-the art technology. This is the first major initiative of the ministry after new Commerce and Industry minister Nirmala Sitharaman took charge this week.
Sources said that permitting FDI in the sector �will hugely help in reducing import bill for Defence equipment, will help in boosting manufacturing and creating jobs�.
In May 2010, the DIPP had rolled out a discussion paper suggesting increase in FDI cap for the defence sector.