India to ease rules to boost foreign investment in domestic defence firms

India plans to make it much easier for foreign firms to invest in defence companies, two government sources with knowledge of the matter said - a move that would align with efforts to boost domestic manufacturing after last year's conflict with Pakistan.



The cap on foreign direct investment in defence firms with existing licences under the so-called automatic route, where government approval is not required, is set to be raised to 74% from 49%, the sources said.



Presently, foreign investors can only own 74% of an Indian defence business under the automatic route when the companies are seeking new licenses.



The government is also in discussions about dropping a condition that stipulates foreign investment beyond 74% is only allowed if it "results in access to modern technology" - wording that has been criticised by experts as vague and ambiguous.