The Indian Government has decided to allow overseas investors to take stakes of up to 26% in state-run defence equipment manufacturers, and at the same time has cleared the way for the country's airports to come under full foreign ownership.

New Delhi has not specified which defence firms are to be privatised, but has indicated that, as part of any sell-off, at least 74% of equity must remain in Indian hands.

With the production of military equipment in India having been restricted to the public sector until now, the government is attempting to stimulate much needed private-sector investment in the country's struggling defence industry. State-owned Hindustan Aeronautics, India's largest aerospace and defence company, is currently participating in several high profile and expensive military projects such as the indigenously-developed Light Combat Aircraft.

Meanwhile, India's cabinet has approved plans to lift the foreign-ownership ceiling for the country's airports to 100%, from the current 74%. Overseas investments are needed to help the airports cope with traffic growth, according to the government.

Source: Flight International