Foreign investors can own a stake of up to 74 pct in Indian defense ventures

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India will ease restrictions on the level of foreign ownership in defence manufacturing, Finance Minister Nirmala Sitharaman said on Saturday, in a move aimed at cutting down on imports.

Under the plan, foreign investors would be able to own a stake of up to 74 percent in defense manufacturing ventures, up from the 49 percent limit now, Sitharaman told a news conference.

The increase in foreign investments would help reduce a “huge defense import bill” and make India self-reliant in defense production, she said, adding India would also expand the list of weapons that could not be imported.

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The move would give a major “incentive to foreign defense manufacturers who want to retain control” in the joint ventures, said Atul Pandey, a partner at India law firm Khaitan & Co, that advises defense firms.

He said major defense manufacturers, such as Lockheed Martin Corp., Boeing, MBDA, Raytheon and Dassault, which all have joint ventures in India, could expand their investments, he said.

Read more: India’s Modi renews plea for manufacturing investment

The government, facing a big drop in revenue collections amid the coronavirus crisis, has faced calls from policymakers to cuts in spending, including defense imports.

In February, the finance minister allocated 4.71 trillion rupees ($62.1 billion) for defense in the annual budget for 2020/21, including about 1 trillion rupees for capital spending.

Between 2013 and 2017, India was the world’s top arms importer, accounting for 12 percent of total imports globally, with Russia, Israel and the United States among the top suppliers.

Prime Minister Narendra Modi earlier this year set up a target to double defense exports in next five years, from about $2.4 billion a year now.