The Government vide Press Note 7 /2014 dated 26th August, 2014
has allowed FDI upto 49% on approval route in Defence sector with
certain conditions e.g., the applicant company seeking FIPB
approval be an Indian company owned and controlled by resident
Indian citizens. Above 49% the proposal will be routed to Cabinet
Committee on Security on a case to case basis, wherever it is
likely to result in access to modern and state-of-art technology in
the country. FPI investment has been allowed to be made in the
Defence sector upto 24% on automatic route. A number of conditions
have been relaxed /removed making the sector more investor
The proposal is expected to result in technology transfer which
would help in increasing the production base and providing an
impetus to manufacturing sector and job creation in India. The
measure is expected to not only reduce the heavy burden of imports
and conserve foreign exchange reserves but also make domestic
manufacturing an integral part of GDP growth of the country.
The Govt. (vide PN 8/2014 dated 26th August, 2014) has allowed
100% private and FDI investment under automatic route in Rail
infrastructure (other than construction, operation and maintenance
of (i) Suburban corridor projects through PPP, (ii) High speed
train projects, (iii) Dedicated freight lines, (iv) Rolling stock
including train sets, and locomotives/coaches manufacturing and
maintenance facilities, (v) Railway Electrification, (vi) Signaling
systems, (vii) Freight terminals, (viii) Passenger terminals, (ix)
Infrastructure in industrial park pertaining to railway
line/sidings including electrified railway lines and connectivities
to main railway line and (x) Mass Rapid Transport Systems ) subject
to meeting sectoral laws and with the condition that FDI beyond 49%
in sensitive areas from security point of view will be approved by
the Cabinet Committee on Security on a case to case basis.
The proposal for amendments will facilitate private investment
including FDI inflows into infrastructure projects including
elevated rail corridor project in Mumbai, High Speed Train project,
port connectivity projects, dedicated freight corridors, logistic
parks, station development, locomotive manufacturing units and
power plants, through public-private partnerships which would not
only bring in the much needed capital but also technology and
global best practices.
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