The government is considering liberalisation of foreign direct investment (FDI) norms in the defence sector to further attract overseas investors, an official said on Monday.
The Department for Promotion of Industry and Internal Trade is holding stakeholder consultations on the subject.
"Some easing in norms is under consideration," the official said.
1 August 2026
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Currently, FDI up to 74% is permitted through the automatic route, while beyond that foreign direct investment is allowed through government approval route wherever it is likely to result in access to modern technology.
As per the policy, foreign investment in the sector is subject to security clearance by the Ministry of Home Affairs and as per the guidelines of the Ministry of Defence.
India has attracted $32.29 million FDI in defence industries between April 2000 and March 2026.
The government has taken a series of measures to boost manufacturing in the sector. India's defence budget has increased from ₹2.53 lakh crore in 2013-14 to ₹7.85 lakh crore in 2026-27. Exports from the sector grew from ₹686 crore in 2013-14 to ₹38,424 crore in 2025-26.
The private sector contributed ₹17,353 crore or 45.16% of defence exports in 2025-26, while defence public sector undertakings contributed ₹21,071 crore or 54.84%.
The government is targeting ₹3 lakh crore in annual defence production and ₹50,000 crore in exports by 2029.
