As per the current FDI Policy, upto 26% FDI is permissible in the Defence Sector subject to licensing through Government route. However, wherever FDI beyond 26% is likely to result in access to modern and state-of-the art technology in the country, decisions can be taken to allow higher FDI on a case-to-case basis with the approval of Cabinet Committee on Security. The current FDI in Defence sector is also subject to the condition that the management of applicant company / partnership should be in Indian hands with majority representation on the Board as well as Chief Executives of the company / partnership firm being resident Indians.
As per another condition of the current FDI Policy, adequate safety and security procedures would need to be put in place by the licensee once the licence is granted and the production commences. The Government has also finalized and put in public domain a Security Manual for private sector defence manufacturing units. The Manual prescribes guidelines for physical, documents, IT and other security measures to be put in place by such units. This information was given by Defence Minister Arun Jaitley in a written reply to Ambeth Rajan in Rajya Sabha today.