The Union government's decision to let the Cabinet Committee on Security (CCS) clear FDI proposals beyond 26 per cent in the defence sector technically leaves it open for CCS to even allow 100 per cent foreign investment in what the Defence Ministry will define as 'state-of-the-art' segments with safeguards built in to ensure that the technology and equipment are not shared with other countries.
Union Defence Minister AK Antony had concerns over allowing higher FDI, but it was pointed out that while the policy did not specify the CCS option, it could be readily incorporated. An incorrect impression had been created that the CCS caveat was being done away with. Indian companies keen on foreign tie-ups include L&T, Mahindra & Mahindra and the Tatas. US firm Lockheed Martin is understood to be interested in a collaboration with the Tatas.
India Inc cheered the changes. Large number of sectors have either seen an increase in FDI cap or have moved under the automatic route from the Foreign Investment Promotion Board (FIPB) approval, Ficci president Naina Lal Kidwai said.