The Indian government has made it clear that foreign investment in defense companies will remain at the level allowed till August last year.

"Foreign Portfolio Investors/Foreign institutional investors ( through portfolio investment) in companies holding defense license as on Aug., 2013, will remain capped at the level existing as on the said date. No fresh FPI/FII is permitted even if the level of such investment falls below the capped level subsequently," the Department of Industrial Policy and Promotion said in a statement Thursday.

In August last year, the government had banned investment by foreign portfolio investors in the defense sector. However, foreign direct investment is allowed up to 26 percent in the defense sector.