In steps to further liberalise and simplify the foreign direct
investment ("FDI") regime in India and
with the objective of providing major impetus to employment and job
creation in India, the Government of India has announced sweeping
changes to the FDI policy. It is stated that most of the sectors
would now be under the automatic approval route except for a small
negative list. The last 2 years have witnessed major FDI policy
reforms in a number of sectors including in defence, insurance,
broadcasting, single brand retail trading, manufacturing, civil
aviation and asset reconstruction companies. Changes now introduced
include increase in sectoral caps, bringing more activities under
automatic route and easing of conditionalities for foreign
investment. Brief details of the changes are as follows:
(a) Food products
manufactured/produced in India – 100% FDI
is now permitted under the Government approval route for trading
including through e-commerce.
Investment in Defence Sector up to 100% –
The following changes have been made:
FDI beyond 49% is now permitted through the 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 has been done away
FDI limits for defence sector is applicable to manufacturing of
small arms and ammunitions covered under the Arms Act 1959.
Carriage Services –New sectoral caps and
entry routes on broadcasting carriage services are as under:
(d) Pharmaceuticals – The existing
FDI policy already allows 100% FDI under the automatic route in
greenfield pharmaceuticals and up to 100% FDI under the Government
approval in brownfield pharmaceuticals. Upto 74% FDI is now
permitted under the automatic route in brownfield pharmaceuticals
– beyond 74% FDI, Government approval is required.
Existing FDI policy
New FDI Policy
Airports (Greenfield projects)
Upto 100% under the automatic route
Airports (Brownfield projects)
Upto 74% under the automatic route and beyond 74%
require Government approval
Upto 100% under the automatic route
Scheduled air transport service/ Domestic scheduled
passenger airline and regional air transport service
Upto 49% under the automatic route
Upto 100% – with upto 49% under the automatic
route; beyond 49% require Government approval
Security Agencies – Upto
49% FDI is now allowed under the automatic route, beyond 49% FDI
and up to 74% FDI would be permitted with Government approval.
of branch office, liaison office or project
office – If the principal business of the
applicant is defence, telecom, private security or information and
broadcasting and where Government approval or license/permission
from the concerned Ministry/Regulator has already been granted,
approval of the Reserve Bank of India or separate security
clearances would not be required.
Husbandry – The requirement of
"controlled conditions" specified for FDI in animal
husbandry (including breeding of dogs), pisciculture, aquaculture
and apiculture, has been done away with.
Brand Retail Trading – Local sourcing norms
relaxed for upto 3 years and a relaxed sourcing regime for another
5 years for entities undertaking single brand retail trading of
products having 'state-of-art' and 'cutting edge'
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).