Govt okays 100% FDI in defence, aviation to calm investors after Rajan exit

Government further relaxes FDI norms, put most sectors under automatic route.

New Delhi:

The Central government on Monday approved 100% FDI in defence and aviation sectors.

FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.

The government also approved up to 49 per cent FDI in Private Security Agencies under automatic route and FDI beyond 49- 74 per cent will be permitted with government approval.

Officials met earlier at the Prime Minister's office to discuss FDI changes that appeared timed to regain the initiative after the surprise announcement by central bank chief Raghuram Rajan at the weekend that he would not seek a second term.

The last time the government announced a loosening of India's complex FDI rules was following a shock defeat for Bharatiya Janata Party in a state election last year.