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6/21/2016

Majorimpetustojobcreationandinfrastructure:RadicalchangesinFDIpolicyregimeMostsectorsonautomaticrouteforFDI

PressInformationBureau
GovernmentofIndia
PrimeMinister'sOffice
20June201614:07IST

Majorimpetustojobcreationandinfrastructure:RadicalchangesinFDIpolicyregimeMostsectorsonautomatic
routeforFDI
The Union Government has radically liberalized the FDI regime today, with the objective of providing major impetus to
employmentandjobcreationinIndia.ThedecisionwastakenatahighlevelmeetingchairedbyPrimeMinisterNarendra
Moditoday.ThisisthesecondmajorreformafterthelastradicalchangesannouncedinNovember2015.Nowmostofthe
sectorswouldbeunderautomaticapprovalroute,exceptasmallnegativelist.Withthesechanges,Indiaisnowthemost
openeconomyintheworldforFDI.
In last two years, Government has brought major FDI policy reforms in a number of sectors viz. Defence,
ConstructionDevelopment,Insurance,PensionSector,BroadcastingSector,Tea,Coffee,Rubber,Cardamom,PalmOilTree
and Olive OilTree Plantations, Single Brand Retail Trading, Manufacturing Sector, Limited Liability Partnerships, Civil
Aviation, Credit Information Companies, Satellites establishment/operation and Asset Reconstruction Companies.
Measures undertaken by the Government have resulted in increased FDI inflows at US$ 55.46 billion in financial year
201516,asagainstUS$36.04billionduringthefinancialyear201314.ThisisthehighesteverFDIinflowforaparticular
financialyear.However,itisfeltthatthecountryhaspotentialtoattractfarmoreforeigninvestmentwhichcanbeachieved
by further liberalizing and simplifying the FDI regime. India today has been rated as Number 1 FDI Investment
DestinationbyseveralInternationalAgencies.
Accordingly the Government has decided to introduce a number of amendments in the FDI Policy. 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
countryandmakeIndiaanattractivedestinationforforeigninvestors.Detailsofthesechangesaregiveninthefollowing
paragraphs:
1.RadicalChangesforpromotingFoodProductsmanufactured/producedinIndia
Ithasnowbeendecidedtopermit100%FDIundergovernmentapprovalroutefortrading,includingthroughecommerce,
inrespectoffoodproductsmanufacturedorproducedinIndia.
2.ForeignInvestmentinDefenceSectorupto100%
PresentFDIregimepermits49%FDIparticipationintheequityofacompanyunderautomaticroute.FDIabove49% is
permittedthroughGovernmentapprovaloncasetocasebasis,whereveritislikelytoresultinaccesstomodernandstate
ofarttechnologyinthecountry.Inthisregard,thefollowingchangeshaveinteraliabeenbroughtintheFDIpolicyonthis
sector:
i.Foreigninvestmentbeyond49%hasnowbeenpermittedthroughgovernmentapprovalroute,incasesresultingin
accesstomoderntechnologyinthecountryorforotherreasonstoberecorded.Theconditionofaccesstostateof
arttechnologyinthecountryhasbeendoneawaywith.
ii. FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions
coveredunderArmsAct1959.
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Majorimpetustojobcreationandinfrastructure:RadicalchangesinFDIpolicyregimeMostsectorsonautomaticrouteforFDI

3.ReviewofEntryRoutesinBroadcastingCarriageServices
FDIpolicyonBroadcastingcarriageserviceshasalsobeenamended.Newsectoralcapsandentryroutesareasunder:
Sector/Activity

NewCapandRoute

5.2.7.1.1
(1)Teleports(settingupofuplinkingHUBs/Teleports)
(2)DirecttoHome(DTH)
(3)Cable Networks (Multi System operators (MSOs) operating
atNationalorStateorDistrictlevelandundertakingupgradation
ofnetworkstowardsdigitalizationandaddressability)
(4)MobileTV
(5)HeadendintheSkyBroadcastingService(HITS)

100%

Automatic

5.2.7.1.2 Cable Networks (Other MSOs not undertaking

upgradationofnetworkstowardsdigitalizationandaddressability

andLocalCableOperators(LCOs))

Infusionoffreshforeigninvestment,beyond49%inacompanynotseekinglicense/permission

from sectoral Ministry, resulting in change in the ownership pattern or transfer of stake by

existinginvestortonewforeigninvestor,willrequireFIPBapproval

4.Pharmaceutical
TheextantFDIpolicyonpharmaceuticalsectorprovidesfor100%FDIunderautomaticrouteingreenfieldpharmaand
FDIupto100%undergovernmentapprovalinbrownfieldpharma.Withtheobjectiveofpromotingthedevelopmentof
this sector, it has been decided to permit up to 74% FDI under automatic route in brownfield pharmaceuticals and
governmentapprovalroutebeyond74%willcontinue.

5.CivilAviationSector
(i)TheextantFDIpolicyonAirportspermits100%FDIunderautomaticrouteinGreenfieldProjectsand74%FDIin
BrownfieldProjectsunderautomaticroute.FDIbeyond74%forBrownfieldProjectsisundergovernmentroute.
(ii)Withaviewtoaidinmodernizationoftheexistingairportstoestablishahighstandardandhelpeasethepressure
on the existing airports, it has been decided to permit 100% FDI under automatic route in Brownfield Airport
projects.
(iii) AsperthepresentFDIpolicy,foreigninvestmentupto49%isallowedunderautomaticrouteinScheduledAir
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%
throughGovernmentapproval.ForNRIs,100%FDIwillcontinuetobeallowedunderautomaticroute.However,
foreignairlineswouldcontinuetobeallowedtoinvestincapitalofIndiancompaniesoperatingscheduledandnon
scheduled airtransport services up to the limit of 49% of their paid up capital and subject to the laid down
conditionsintheexistingpolicy.

6.PrivateSecurityAgencies
Theextantpolicypermits49%FDIundergovernmentapprovalrouteinPrivateSecurityAgencies.FDIupto49%isnow
permittedunderautomaticrouteinthissectorandFDIbeyond49%andupto74%wouldbepermittedwithgovernment
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approvalroute.
7.Establishmentofbranchoffice,liaisonofficeorprojectoffice
For establishment of branch office, liaison office or project office or any other place of business in India if the principal
businessoftheapplicantisDefence,Telecom,PrivateSecurityorInformationandBroadcasting,ithasbeendecidedthat
approvalofReserveBankofIndiaorseparatesecurityclearancewouldnotberequiredincaseswhereFIPBapprovalor
license/permissionbytheconcernedMinistry/Regulatorhasalreadybeengranted.
8.AnimalHusbandry
AsperFDIPolicy2016,FDIinAnimalHusbandry(includingbreedingofdogs),Pisciculture,AquacultureandApiculture
isallowed100%underAutomaticRouteundercontrolledconditions.Ithasbeendecidedtodoawaywiththisrequirement
ofcontrolledconditionsforFDIintheseactivities.
9.SingleBrandRetailTrading
Ithasnowbeendecidedtorelaxlocalsourcingnormsuptothreeyearsandarelaxedsourcingregimeforanotherfiveyears
forentitiesundertakingSingleBrandRetailTradingofproductshavingstateofartandcuttingedgetechnology.

TodaysamendmentstotheFDIPolicyaremeanttoliberaliseandsimplifytheFDIpolicysoastoprovideeaseofdoing
businessinthecountryleadingtolargerFDIinflowscontributingtogrowthofinvestment,incomesandemployment.

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