• The new policy raising the cap of foreign direct investment through automatic approval in the defence sector from 49 per cent to 74 per cent now has a ‘National Security’ clause as a condition. 
  • According to sources, the new condition has been proposed by the Ministry of Commerce and Industry.
  • Foreign investment in the Defence Sector shall be subject to scrutiny on ground of National Security.
  • The raising of the FDI cap in the defence sector through the automatic route to 74% was announced by the Finance Minister in May 2020. 
  • The Finance Minister had mentioned it along with a slew of other measures for the sector, including a negative imports list and a dedicated budget for capital acquisition from the domestic industry.