The Department of Industrial Policy & Promotion (DIPP) has sorted out strategic concerns raised by the Home Ministry on easing of Foreign Direct Investment (FDI) rules in defence and railways and presented the proposals to the Union Cabinet.
The Cabinet, in its meeting on Wednesday, is scheduled to take up both the proposals for clearance following which the new rules will be implemented.
“There were some concerns raised by the Home Ministry related to both defence and railways. We have had discussions and everybody is on board now. DIPP is hopeful that both the proposals will be cleared on Wednesday,” a Government official told
In Railways, the proposal is to allow up to 100 per cent FDI in infrastructure projects such as high-speed train systems, suburban corridors and dedicated freight line that are to be executed under public-private partnership (PPP) mode.
The Home Ministry had expressed concerns that there might be security related issues for projects in strategic border areas. “For such projects, prior permission of the Foreign Investment and Promotion Board and clearance from the Home Ministry may be required,” the official said.
In defence related projects, the proposal is to increase FDI limit from 26 per cent to 49 per cent. It had already been decided by the previous UPA regime that projects with FDI higher than 26 per cent would be vetted by a Cabinet Committee on Security, which has been retained.
“The Home Ministry has agreed to clear such projects in maximum three months’ time,” the official said.
India imports about $8 billion worth of defence equipment annually, with the bill growing by more than 10 per cent every year. The Government hopes that raising the FDI limit would make the sector more attractive to foreign investors who would pump in money into the sector leading to more domestic production.