FDI and the sectors gearing up due to Recent FDI policy measures #Hindustan360

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Since 1991, the regulatory environment in terms of foreign investment has been consistently eased to make it investor-friendly. View more at #Hindustan360.

The measures taken by the Government are directed to open new sectors for foreign direct investment, increase the sectoral limit of existing sectors and simplifying other conditions of the FDI policy. FDI policy reforms are meant to provide ease of doing business and accelerate the pace of foreign investment in the country.

Recent FDI policy measures

  • 49% FDI under automatic route permitted in Insurance and Pension sectors
  • Foreign investment up to 49% in defence sector permitted under automatic route. The foreign investment in access of 49% has been allowed on case to case basis with Government approval in cases resulting in access to modern technology in the country or for other reasons to be recorded
  • FDI limit of 100% (49% under automatic route, beyond 49% government route) for defence sector made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959
  • FDI up to 100% under automatic route permitted in Teleports, Direct to Home, Cable Networks, Mobile TV, Headend-in- the Sky Broadcasting Service
  • FDI up to 100% under automatic route permitted in Up-linking of Non-‘News & Current Affairs’ TV Channels, Down-linking of TV Channels
  • In case of single brand retail trading of ‘state-of-art’ and ‘cutting-edge technology’ products, sourcing norms can be relaxed up to three years and sourcing regime can be relaxed for another 5 years subject to Government approval
  • Foreign equity cap of activities of Non-Scheduled Air Transport Service, Ground Handling Services increased from 74% to 100% under the automatic route
  • 100% FDI under automatic route permitted in Brownfield Airport projects
  • FDI limit for Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service raised to 100%, with FDI upto 49% permitted under automatic route and FDI beyond 49% through Government approval
  • Foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and nonscheduled airtransport services up to the limit of 49% of their paid up capital
  • In order to provide clarity to the e-commerce sector, the Government has issued guidelines for foreign investment in the sector. 100% FDI under automatic route permitted in the marketplace model of e-commerce
  • 100% FDI under Government route for retail trading, including through e-commerce, has been permitted in respect of food products manufactured and/or produced in India
  • 100% FDI allowed in Asset Reconstruction Companies under the automatic route
  • 74% FDI under automatic route permitted in brownfield pharmaceuticals. FDI beyond 74% will be allowed through government approval route
  • FDI limit for Private Security Agencies raised to 74% (49% under automatic route, beyond 49% and upto 74% under government route)
  • 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 would not be required in cases where FIPB approval or license/permission by the concerned Ministry/Regulator has already been granted
  • Requirement of ‘controlled conditions’ for FDI in Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture and Apiculture has been waived off

Type of Investors

  • Individual:
    1. FVCI (Foreign Venture Capital Investors)
    2. Pension/Provident Fund
    3. Financial Institutions
  • Company:
    1. Foreign Trust
    2. Sovereign Wealth Funds
    3. NRIs (Non Resident Indians)/ PIOs (Persons of Indian Origin)
  • Foreign Institutional Investors:
    1. Private Equity Funds
    2. Partnership / Proprietorship Firm
    3. Others

Sectors requiring Central Govt. Approval (RELEVANT PARA OF CONSOLIDATED FDI POLICY, JUNE 2016)

  • Mining and mineral separation of titanium bearing minerals and ores – Upto 100% (5.2.3.3*)
  • Defence – Beyond 49% & upto 100% (5.2.6)
  • Publishing/printing of scientific and technical magazines/specialty journals/ periodicals – Upto 100% (5.2.8.3)
  • Publication of facsimile edition of foreign newspapers – Upto 100% (5.2.8.4)
  • Print Media – Publishing of newspaper and periodicals dealing with news and current affairs – Upto 26% (5.2.8.1)
  • Print Media – Publication of Indian editions of foreign magazines dealing with news and current affairs – Upto 26% (5.2.8.2)
  • Air Transport Service – Scheduled, and Regional Air Transport Service – Beyond 49% & Upto 100% (5.2.9.2(1))
  • Satellites – establishment and operation – Upto 100% (5.2.12)
  • Telecom Services – Beyond 49% & Upto 100% (5.2.14)
  • Trading – Single Brand Retail Trading (SBRT) – Beyond 49% & Upto 100% (5.2.15.3)
  • Pharma – Brownfield – Beyond 74% & Upto 100% (5.2.27.2)
  • Banking – Private Sector – Beyond 49% & Upto 74% (5.2.18)
  • Banking – Public Sector – Upto 20% (5.2.19)
  • Private Security Agencies – Beyond 49% & Upto 74% (5.2.13)
  • Broadcasting Content Service
    1. FM Radio – Upto 49% (5.2.7.2.1)
    2. Uplinking of ‘News & Current Affairs’ TV Channels – Upto 49% (5.2.7.2.2)
  • Trading – Multi Brand Retail Trading (MBRT) – Upto 51% (5.2.15.4)

Sectors under automatic route (RELEVANT PARA OF CONSOLIDATED FDI POLICY, JUNE 2016)

  • Agriculture – 100% (5.2.1*)
  • Plantation Sector – 100% (5.2.2)
  • Mining of metal and non-metal ores – 100% (5.2.3.1)
  • Mining – Coal & Lignite – 100% (5.2.3.2)
  • Food Product Retail Trading – 100% (5.2.5)
  • Broadcasting Carriage Services (Teleports, DTH, Cable Networks, Mobile TV, HITS) – 100% (5.2.7.1)
  • Broadcasting Content Service – Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels – 100% (5.2.7.2.3)
  • Airports – Greenfield – 100% (5.2.9.1 (a))
  • Airports – Brownfield – 100% (5.2.9.1 (b))
  • Air Transport Service – Non-Scheduled – 100% (5.2.9.2 (2))
  • Air Transport Service – Helicopter Services/ Seaplane Services – 100% (5.2.9.2 (3))
  • Ground Handling Services – 100% (5.2.9.3 (1))
  • Maintenance and Repair organizations; flying training institutes; and technical training institutions – 100% (5.2.9.3 (2))
  • Construction Development – 100% (5.2.10)
  • Industrial Parks – new and existing – 100% (5.2.11)
  • Trading – Wholesale – 100% (5.2.15.1)
  • Trading – B2B E-commerce – 100% (5.2.15.2)
  • Duty Free Shops – 100% (5.2.15.5)
  • Railway Infrastructure** – 100% (5.2.16)
  • Asset Reconstruction Companies – 100% (5.2.17)
  • Credit Information Companies – 100% (5.2.20)
  • White Label ATM Operations – 100% (5.2.25)
  • Non-Banking Finance Companies – 100% (5.2.26)
  • Pharma – Greenfield – 100% (5.2.27.1)
  • Petroleum & Natural Gas – Exploration activities of oil and natural gas fields – 100% (5.2.4.1)
  • Petroleum refining by PSUs – 49% (5.2.4.2)
  • Infrastructure Company in the Securities Market – 49% (5.2.21)
  • Commodity Exchanges – 49% (5.2.21)
  • Insurance – 49% (5.2.22)
  • Pension – 49% (5.2.23)
  • Power Exchanges – 49% (5.2.24)

View more at #Hindustan360.