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Defence, banking out of composite FPI caps


  • The government clarified it had deliberately kept the defence and banking sectors out of the purview of composite foreign investment caps to avoid “fly-by-night operators” and “quick money” entering these sensitive sectors.
  • The Cabinet Committee on Economic Affairs approved the long-pending demand of international investors of subsuming all types of foreign investments into a single sectoral limit, wherever they are applicable.
  • At present, in the defence sector, foreign investment limit of 49 percent is allowed under the automatic route.
  • For investment proposals above 49 percent, permission by the Cabinet Committee on Securities (CCS) on a case-to-case basis will be required.
  • In private sector banking, the FPI limit is 49 per cent.
  • The aggregate foreign investment in a private bank from all sources will be allowed up to a maximum of 74 percent of the paid up capital of the bank, within which there is sub-cap for FPIs.


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