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. ADVERTISEMENTPresently, foreign investors can only own 74% of an Indian defence business under the automatic route when the companies are seeking new licenses. Another condition set to be dropped is a requirement for fully export-oriented defence manufacturers to set up domestic maintenance and support facilities, the sources said. Muted investment thus farForeign defence firms that currently have operations in India through joint ventures or strategic partnerships include France's Airbus, Lockheed Martin of the U.S. and Israel's Rafael Advanced Defense Systems. Last year, the government also said it aimed to nearly double domestic production of defence equipment to $33.25 billion and boost defence exports to $5.5 billion by 2029.

Source: The Telegraph January 16, 2026 13:22 UTC