Budget 2014: FM announces 49% FDI in defence and insurance sectors

Finance minister Arun Jaitley in his Budget presented in the Lok Sabha today has announced an increase in foreign direct investment (FDI) to 49 per cent in  the insurance and defense sectors.

AK Antony, who earlier handled the defence ministry during the UPA regime was against hiking FDI in defence sector.

On May 30, 2014, the commerce ministry is reported to have cleared a cabinet note from the department of industrial policy and promotion (DIPP) to hike foreign direct investment (FDI) in the defence sector to 100 per cent from the current 26 per cent (See: Commerce ministry okays 100% FDI in defence sector) 

The BJP manifesto had spoken about allowing FDI in all sectors for asset and job creation and giving thrust to manufacturing to pull up economic growth

Yesterday, the US India Business Coouncil (USBIC) had also sought an increase in FDI cap in key sectors like insurance and defence.

"This enables greater defence manufacturing cooperation, wider scope of technology transfer, and expedient development of India's defence industrial and technological base," it said.

According to experts the passage of the Insurance Laws (Amendment) Bill, 2008 is an urgent business reform needed to boost domestic job creation and send a strong signal to the global investment community that India is 'open for business'.