Defence sector stocks rose up to 10% today after Modi government said it would ease foreign direct investment norms in defence manufacturing by allowing 74 per cent FDI under the automatic route to attract overseas players in the sector.
Share price of Hindustan Aeronautics rose 10.03 percent at Rs 576, Bharat Electronics gained 5.54 percent to Rs 71.5, Mishra Dhatu Nigam up 7.23 percent at Rs 224.65 and Bharat Dynamics gained 4.72 percent at Rs 250.9. Apollo Micro Systems stock rose 8.69 percent to Rs 95.7, BEML up 5.32 percent at Rs 630, Bharat Forge up 4.02 percent at Rs 288.70 and Premier Explosives rose 5 percent to Rs 78.65 on BSE.
As per the current FDI policy, 100 per cent overseas investments are permitted in the defence industry -- 49 per cent under the automatic route, while beyond that government approval is required. "It will have security clearance and everything else as always," FM Nirmala Sitharaman said while announcing the fourth tranche of the Rs 20.97 lakh crore stimulus package for the coronavirus-hit economy.
The government has been planning to increase on self-reliance on defence production.
"We are notifying a list of weapons/platforms for ban on import with year wise timelines; we will focus more on indigenisation of imported spares; and there will be a separate budget provisioning for domestic capital procurement, which all will help reduce huge defence import bill of the country," the FM explained.
In July 2018, the government eased foreign direct investment norms in the defence sector by allowing FDI up to 49 per cent under the automatic route.