The government is weighing a relaxation of foreign direct investment (FDI) rules in the defence sector to draw more overseas investors, an official said on Monday.
The Department for Promotion of Industry and Internal Trade is conducting consultations with stakeholders on the matter.
"Some easing in norms is under consideration," the official said.
At present, foreign direct investment of up to 74 per cent is allowed through the automatic route, while any investment beyond this level is permitted through the government approval route in cases where it is expected to provide access to advanced technology.
Under the policy, foreign investment in this sector requires security clearance from the Ministry of Home Affairs and must comply with the Ministry of Defence guidelines.
India has received USD 32.29 million in foreign direct investment in defence industries between April 2000 and March 2026.
The government has implemented multiple initiatives to strengthen manufacturing in the sector.
India’s defence budget has risen from Rs 2.53 lakh crore in 2013–14 to Rs 7.85 lakh crore projected for 2026–27. Sectoral exports have expanded from Rs 686 crore in 2013–14 to Rs 38,424 crore in 2025–26.
In 2025-26, the private sector accounted for Rs 17,353 crore, representing 45.16 per cent of defence exports, while defence public sector undertakings contributed Rs 21,071 crore, making up 54.84 per cent.
The government aims to achieve annual defence production worth Rs 3 lakh crore and defence exports of Rs 50,000 crore by 2029.
