NEW DELHI Aug 6 India's cabinet approved a plan
on Wednesday to raise the amount of foreign direct investment
allowed in its defence and railways industries, part of Prime
Minister Narendra Modi's efforts to attract more foreign cash
and revive the economy.
The government is to increase the foreign investment limit
in the defence industry to 49 percent from 26 percent, a senior
cabinet minister told Reuters following a cabinet meeting.
Limits will be lifted altogether on foreign investment in
railway infrastructure, although foreigners will still be barred
from investing in railway operations, the minister said,
speaking on the condition of anonymity.
Cabinet approval for the plans was widely expected after
Modi's two-month old government said it would ease foreign
investment limits in its budget last month.
The government's efforts to push through such reforms and
open up the economy have already come up against early
Over the past week, the government has twice sought to
introduce legislation allowing more foreign investment in the
insurance sector, but it has been blocked by the opposition.
India, the world's largest arms importer, wants to open up
the domestic weapons industry to help boost domestic
manufacturing and modernise its Soviet-era military.
The country's vast railways network has also suffered from
years of low investment, turning a once-mighty system into a
slow, badly-congested network. The railways spend 94 percent of
revenues on operating costs, leaving next to nothing for
(Reporting by Nigam Prusty; Writing by Tommy Wilkes)