Insiders: India will relax rules to promote foreign investment in domestic defense companies.

Two government sources familiar with the matter said that India plans to provide more facilitation for foreign companies to invest in defense companies, a move that will be in line with efforts to promote domestic manufacturing after last year's conflict with Pakistan. According to the sources, the foreign direct investment limit for defense companies with existing licenses will be increased from 49% to 74% under the so-called "automatic route." Currently, under the automatic route, foreign investors can only own up to 74% of Indian defense companies if these companies are applying for new licenses. The government is also discussing the possibility of removing a condition that allows foreign investment to exceed 74% only if it is "able to access modern technology"experts criticize this wording as ambiguous. They added that the reform may be implemented in the coming months. The Indian Ministry of Commerce and the Ministry of Defense did not respond to requests for comment.