Defence related companies rally as government notifies FDI hike

MUMBAI: Shares of defence related companies such as Astra Microwave, BEML etc. surged in trade after the government notified increase in foreign direct investment (FDI) limit to 49 per cent through approval route in the sector.

The move is aimed at boosting domestic industry of the country which imports up to 70 per cent of its military hardware.

Reacting to the news, stocks related to defence sector such as BEL rallied 18.21 per cent, Astra Microwave rose as much as 9.26 per cent, followed by Walchandnagar Industries Ltd which surged as much as 9.9 per cent and BEML, Pipavav Defence, Dynamatic Technologies rose nearly 5 per cent each.

FDI ceiling in the sensitive defence sector has been hiked from current 26 per cent, with the condition that the company seeking permission of the government for FDI up to 49 per cent should be an Indian company owned and controlled by Indians.

Foreign direct investment proposals above 49 per cent will have to seek the approval of the Cabinet Committee on Security on "case to case basis, wherever it is likely to result in access to modern and state of the art technology in the country," according to the press note of the Department of Industrial Policy and Promotion.