Under the current FDI policy, foreign direct investment up to 100% is permitted under the automatic route for the defense sector, without requiring prior government approval.

While the FDI limit in the defense sector was raised to 100%, the automatic route is only permitted up to 74%. Any FDI beyond 74% (up to 100%) requires prior approval from the Government of India through the Department for Promotion of Industry and Internal Trade (DPIIT), primarily on national security grounds.