In May 2001, the Defence Industry sector, which was hitherto reserved for the public sector, was opened up to 100% for Indian private sector participation, with Foreign Direct Investment (FDI) up to 26% both subject to licensing.

Further, Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry vide Press Note No. 5(2016 Series), has allowed FDI under automatic route up to 49% and above 49% through government route wherever it is likely to result in access to modern technology or for other reasons to be recorded.

Further, FDI in defence industry sector is subject to industrial license under Industries (Development & Regulation) Act, 1951 and manufacturing of small arms and ammunition under the Arms Act, 1959. As per the data furnished by 79 companies in Defence and Aerospace sector, so far (i.e. till December, 2019), FDI inflows of over Rs. 3155 crores have been reported in Defence and Aerospace sectors. Further, FDI inflows of over Rs. 1834 crores have been reported in Defence and Aerospace sector after 2014.

This information was given by Raksha Rajya Mantri Shri Shripad Naik in a written reply to Shri Rewati Raman Singh in Rajya Sabha today.