The Union government is mulling plans to hike foreign direct investment (FDI) cap in various sectors including defence, Chief Economic Adviser (CEA) Raghuram Rajan revealed on Tuesday.

Mr. Rajan, chief economic adviser to the finance ministry, said the government intended to expand the FDI cap in all possible areas.

Speaking on the topic, Mr. Rajan said, "The intent is to expand the cap wherever possible including defence ... The proposal for defence is being examined."

The CEA added that the Department of Industrial Policy & Promotion (DIPP) had proposed to increase the FDI cap in defence to 49 per cent.

Currently, the defence sector accepts FDI of up to 26 per cent. India's defence equipment industry was opened to private investors in May 2001, but with restriction of FDI cap of up to 26 per cent.

Regarding the country's economic growth, Mr. Rajan said admitted that 4.8 per cent growth in the January to March quarter wasn't satisfactory, but added that the government's ongoing economic measures would boost growth in the current fiscal year.

In the last fiscal year, the country's gross domestic product (GDP) grew at a decade low of 5 per cent, while the government hopes that its corrective measures would help it achieve a growth rate of 6.1-6.7 per cent in FY2013-14.