Highlights:
* The government has significantly liberalised the FDI regime. The focus is on employment and job generation in India, the government said. The decision was taken at a high-level Cabinet meeting chaired by the PM.
* Under fresh norms, most sectors barring a few in the negative list will now fall under the automatic route of the FDI regime. The changes will make India the most open economy in the world for FDI, the government said
* FDI in the defence sector has been increased to 100 per cent. The revised limits will also be applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.
* Local sourcing norms for FDI in single brand retail have also been eased for a period of three years, paving way for Apple to open up its stores in India. FDI upto 49 per cent has been allowed in civil aviation under automatic route, beyond 49% will be through government approval.
* Other key changes include 100 per cent FDI under government approval route for trading, including through e-commerce; 74% FDI in brownfield pharmaceuticals under automatic route and 100% FDI in brownfield airport projects under automatic route.
New Delhi: In a move to further attract investment in manufacturing of defence equipment, the government today approved Foreign Investment (FDI) up to 100% in Defence Sector. FDI norms have also been eased in other sectors that include civil aviation, pharmaceutical, single brand retail, animal husbandry and private security agencies.
“Foreign investment beyond 49% has now been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded. The condition of access to ‘state-of-art’ technology in the country has been done away with,” a press release by the government said.
FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.
Present FDI regime permits 49% FDI participation in the equity of a company under automatic route. FDI above 49% is permitted through Government approval on case to case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country.
Changes introduced in the policy include increase in sectoral caps, bringing more activities under automatic route and easing of conditionalities for foreign investment.
“These amendments seek to further simplify the regulations governing FDI in the country and make India an attractive destination for foreign investors,” the government said, adding that the changes now make India the most open economy in the world in FDI.
FDI inflows in India have increased to US$ 55.46 billion in financial year 2015-16, as against US$ 36.04 billion during the financial year 2013-14.
The government has decided to introduce a number of amendments in the FDI Policy. Here are some of the changes introduced today:
Food Products manufactured/produced in India
100% FDI permitted under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India.
Defence Sector
The government has now permitted Foreign investment beyond 49% through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded. The condition of access to ‘state-of-art’ technology in the country has been done away with. FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.
Broadcasting Carriage Services
Upto 100% FDI through automatic route has been allowed in Teleports (setting up of up-linking HUBs/Teleports), Direct to Home (DTH), Cable Networks, Mobile TV and Headend-in-the Sky Broadcasting Service(HITS).
Pharmaceutical Sector
The extant FDI policy on pharmaceutical sector provides for 100% FDI under automatic route in greenfield pharma and FDI up to 100% under government approval in brownfield pharma. 74% FDI is now permitted under automatic route in brownfield pharmaceuticals and government approval route beyond 74% will continue.
Civil Aviation Sector
(i) The extant FDI policy on Airports permits 100% FDI under automatic route in Greenfield Projects and 74% FDI in Brownfield Projects under automatic route. FDI beyond 74% for Brownfield Projects is under government route.
(ii) With a view to aid in modernization of the existing airports to establish a high standard and help ease the pressure on the existing airports, it has been decided to permit 100% FDI under automatic route in Brownfield Airport projects.
(iii) As per the present FDI policy, foreign investment up to 49% is allowed under automatic route in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service. It has now been decided to raise this limit to 100%, with FDI up to 49% permitted under automatic route and FDI beyond 49% through Government approval. For NRIs, 100% FDI will continue to be allowed under automatic route. However, foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and non-scheduled air-transport services up to the limit of 49% of their paid up capital and subject to the laid down conditions in the existing policy.
Private Security Agencies
The extant policy permits 49% FDI under government approval route in Private Security Agencies. FDI up to 49% is now permitted under automatic route in this sector and FDI beyond 49% and up to 74% would be permitted with government approval route.
Establishment of branch office, liaison office or project office
For establishment of branch office, liaison office or project office or any other place of business in India if the principal business of the applicant is Defence, Telecom, Private Security or Information and Broadcasting, approval of Reserve Bank of India or separate security clearance would not be required in cases where FIPB approval or license/permission by the concerned Ministry/Regulator has already been granted.
Animal Husbandry
As per FDI Policy 2016, FDI in Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture and Apiculture is allowed 100% under Automatic Route under controlled conditions. It has been decided to do away with this requirement of ‘controlled conditions’ for FDI in these activities.
Single Brand Retail Trading
Local sourcing norms and sourcing regime are now relaxed upto three years and five years resepectively for entities undertaking Single Brand Retail Trading of products having ‘state-of-art’ and ‘cutting edge’ technology.
