To
promote Foreign Direct Investment(FDI), the Government has put in place an
investor-friendly policy, wherein except for a small negative list, most
sectors are open for 100% FDI under the Automatic route. Further, the policy on
FDI is reviewed on an ongoing basis, to ensure that India
remains attractive & investor friendly destination. Changes are
made in the policy after having intensive consultations with stakeholders
including apex industry chambers, Associations, representatives of
industries/groups and other organizations taking into consideration their
views/comments. The FDI policy is applicable across the sectors/ industries and
equally applies to SME sector. Moreover, the recent measures taken to promote
FDI in the country are provided in ‘Consolidated FDI Policy Circular of 2016’,
as amended from time to time, through Press Notes, which is available at the
website of Department of Industrial Policy and Promotion at www.dipp.nic.in. A gist of
recent reforms is at
Annexure.
Separate
data regarding investment made by foreign companies in Small and Medium
Enterprises (SMEs) is not maintained. Further, investment by foreign companies
who invested in India is maintained remittance wise, which is very voluminous
and is available in public domain at the website of Department of Industrial
Policy & Promotion at www.dipp.nic.in under the heading `Publication’ at
‘SIA Newsletter’.
Foreign
Investment in various sectors bring international best practices and latest
technologies leading to economic growth in the country and providing much
needed impetus to manufacturing sector and job creation in India. In line with
the policy to provide boost to the manufacturing sector and give impetus to the
‘Make in India’ initiative, the Government has permitted a manufacturer to sell
its product through wholesale and/or retail, including through e-commerce under
automatic route.
To
look after the interest of Indian SME sector, certain provisions have been
provided for FDI in retail trading sector. For retail trading of single brand
products, in respect of proposals involving foreign investment beyond 51%,
sourcing of 30% of the value of goods purchased, has been mandated to be done
from India, preferably from MSMEs, village and cottage industries, artisans and
craftsmen, in all sectors.
With
a view to benefit farmers, give impetus to food processing industry and create
vast employment opportunities, 100% FDI under Government route for trading,
including through e-commerce, has been permitted in respect of food products
manufactured and/or produced in India.
This
information was given by the Commerce and Industry Minister Smt. Nirmala Sitharaman
in a written reply in Rajya Sabha today.
ANNEXURE
ANNEXURE
REFERRED TO IN REPLY TO PARTS (a) TO (e) OF THE RAJYA SABHA UNSTARRED QUESTION
NO. 667 FOR ANSWER ON 8th FEBRUARY, 2017.
·
Investment
made by NRIs, PIOs and OCIs under Schedule 4 of FEMA (Transfer or Issue of
Security by Persons Resident Outside India) Regulations on non-repatriation
basis is now deemed to be domestic investment at par with the investment made
by residents.
·
The
special dispensation of NRIs has also been extended to companies, trusts and
partnership firms, which are incorporated outside India and are owned and
controlled by NRIs.
·
In
order to provide simplicity to the FDI policy and bring clarity on application
of conditionalities and approval requirements across various sectors, different
kinds of foreign investments have been made fungible under one composite cap.
·
FDI up to 100% through automatic route has been allowed in White
Label ATM Operations.
·
Reforms in FDI Policy on Construction
Development sector include:
§ Removal of
conditions of area restriction and minimum capitalization to be brought in
within the period of six months of the commencement of business.
§ Exit and
repatriation of foreign investment is now permitted after a lock-in-period of
three years. Transfer of stake from one non-resident to another non-resident,
without repatriation of investment is also neither to be subjected to any
lock-in period nor to any government approval.
§ Exit is
permitted at any time if project or trunk infrastructure is completed before
the lock-in period.
§ 100% FDI under
automatic route is permitted in completed projects for operation and management
of townships, malls/ shopping complexes and business centres.
·
Foreign
investment up to 49% in defence sector has been permitted under
automatic route along with specified conditions. Further portfolio investment
and investment by FVCIs has been allowed up to permitted automatic route level
of 49%. The foreign investment beyond 49% has been permitted through government
approval in cases resulting in access to modern technology in the country or
for other reasons to be recorded. Further, FDI limit for defence sector has
also been made applicable to Manufacturing of Small Arms and Ammunitions
covered under Arms Act 1959.
·
Sectoral
cap on Broadcasting sector has been raised across various activities as
follows:
§ 74% to 100% in
Teleports, DTH, Cable Networks (Digital), Mobile TV, HITS
§ 26% to 49% for
FM Radio, up-linking of news and current affairs
§ 49% to 100% for
Cable Networks (not undertaking digitisation)
·
FDI
route for Teleports, DTH, Cable Networks (Digital), Mobile TV, HITS, Cable
Networks (not undertaking digitisation), and Up-linking of Non- ‘news and
current affairs’ and down-linking of channels has been changed to automatic
route.
·
Full
fungibility of foreign investment has been introduced in Banking-Private
sector. Accordingly, FIIs/FPIs/QFIs, following due procedure, can now invest
up to sectoral limit of 74%.
·
Certain
plantation activities namely coffee, rubber, cardamom, palm oil tree and
olive oil tree plantations have been opened for 100% foreign investment under
automatic route.
·
A
manufacturer has been permitted
to sell its product through wholesale and/or retail, including through
e-commerce under automatic route.
·
Government
has reviewed single brand retail trading (SBRT) FDI policy to provide
that sourcing of 30% of the value of goods purchased would be reckoned from the
opening of first store. In case of entities undertaking Single Brand Retail
Trading of products having ‘state of art’ and ‘cutting edge’ technology and
where local sourcing is not possible, sourcing norms have been relaxed up to
three years for entities undertaking Single Brand Retail. Further, an entity
operating SBRT through brick and mortar stores has been permitted to undertake
e-commerce activities as well.
·
Indian
brands are equally eligible for FDI to undertake SBRT. In this regard, it has
been provided that certain conditions of the FDI policy on the sector namely-
products to be sold under the same brand internationally and investment by
non-resident entity/ entities as the brand owner or under legally tenable
agreement with the brand owner, will not be made applicable in case of FDI in
Indian brands.
·
100%
FDI is now permitted under automatic route in Duty Free Shops located
and operated in the Customs bonded areas.
·
FDI
policy on wholesale cash & carry activities has been reviewed to provide
that a single entity will be permitted to undertake both the activities of SBRT
and wholesale.
·
100%
FDI is now permitted under the automatic route in Limited Liability
Partnerships (LLP) operating in sectors/activities where 100% FDI is
allowed, through the automatic route and there are no FDI-linked performance
conditions. Further, the terms ‘ownership and ‘control’ with reference to LLPs
have also been defined.
·
Regional
Air Transport Service
has been opened for foreign investment up to 100%, with 49% under automatic
route, and beyond that through government approval route. Foreign equity cap of
activities of
Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline has been
increased from 49% to 100%, with 49% under automatic route, and beyond that
through government approval route. Further, foreign equity cap of activities of
Non-Scheduled Air Transport Service, Ground Handling Services have been
increased from 74% to 100% under the automatic route.
·
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, 100% FDI under
automatic route has been permitted in Brownfield Airport projects.
·
Foreign
investment cap on Satellites- establishment and operation has now been
raised from 74% to 100% under the government route.
·
Foreign
investment cap on Credit Information Companies has now been
increased from 74% to 100% under the automatic route.
·
In
order to achieve faster approvals on most of the proposals, the Government has
raised the threshold limit for approval by FIPB to Rs. 5000 crore.
·
FDI
Policy on Insurance and Pension sector has been reviewed to
permit foreign investment up to 49% under the automatic route.
·
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
is permitted in the marketplace model of e-commerce.
·
With
an objective of increase investment in the country, 100% FDI in Asset
Reconstruction Companies has been allowed under automatic route.
·
100%
FDI under government approval route has been permitted for trading, including
through e-commerce, in respect food products manufactured
and/or produced in India.
·
In
Pharmaceutical sector, with
the objective of making the sector more attractive to foreign investors, 74%
FDI under automatic route has been permitted in brownfield pharmaceuticals. FDI
beyond 74% will be allowed through government approval route.
·
FDI
limit for Private
Security Agencies
has been raised to 74%. FDI up to 49% is permitted under automatic route in
this sector and FDI beyond 49% and up to 74% would be permitted with government
approval.
·
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, it has been
provided that 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.
·
As
per FDI Policy 2016, FDI in Animal Husbandry (including breeding of dogs),
Pisciculture, Aquaculture and Apiculture was allowed 100% under Automatic Route
under controlled conditions. This requirement of ‘controlled conditions’ for
FDI in these activities has now been done away with.
·
Government
has reviewed FDI policy on Other Financial Services and NBFCs to provide that
foreign investment in financial services activities regulated by financial
sector regulators such as RBI, SEBI, IRDA etc. will be 100% under the automatic
route. In financial services, which are not regulated by any financial sector
regulator or where only part of the financial service activity is regulated or
where there is doubt regarding regulatory oversight, foreign investment upto
100% will be allowed under the government approval route.
*****
MJPS