Reports noted that the Ministry of Defence has voiced its concerns over the current method of calculating foreign direct investment (FDI) in defence production. At present, FDI up to 26 per cent is allowed in defence industry. This limit however does not take into consideration those foreign investments which are routed through the majority-holding Indian companies. The MoD argues that this allows foreign companies to increase their stakes in Indian defence companies, beyond what is desired under the FDI rules.1

• 1. Gireesh Chandra Prasad, “Defence ministry seeks safeguards in FDI math,” The Economic Times, October 20, 2009.