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India approves foreign investment hike in railways, defence

Published on Aug 7, 2014 4:08 PM
Porters transport goods on a hand-pulled trolley to load onto a train at a railway station in Kolkata on July 8, 2014. -- PHOTO: REUTERS

NEW DELHI (AFP) - India's cabinet has approved plans to open its defence and railways industries to foreign investment as new Prime Minister Narendra Modi's right-wing administration moves to reform and revive the ailing economy.

Cabinet agreed late Wednesday to increase the limit on foreign direct investment in defence to 49 per cent from 26 per cent, and allow unlimited investment in railway infrastructure, according to the Press Trust of India news agency.

The government, which unveiled both plans in the budget last month, is attempting to push ahead with much-needed reforms after sweeping to power at elections in May with the biggest mandate in 30 years.

But its efforts hit a major hurdle this week, when the opposition blocked its attempts to introduce legislation to lift investment in the insurance sector.

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