The Government of India has bought out revised Foreign Direct Investment (FDI) Policy. Set out below is a snapshot of the recent liberalizations brought in the FDI Policy governing different sectors in India.
The policy prescribes the foreign investment caps in specified industrial sectors; these caps are subject to applicable laws/regulations; security and other conditionalities.
FDI policy broadly categorizes industrial sectors as:
- Unrestricted
- Restricted
- Prohibited
UNRESTRICTED SECTORS
Up to 100% foreign ownership | |
Agriculture
& Animal Husbandry
|
Automatic route |
Plantation
Sector
|
Automatic route |
Construction
Development: Townships, Housing, Built-up
Infrastructure Construction-development projects (which would include development of townships, construction of residential/commercial premises, roads or bridges, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure, townships) |
Automatic route |
Railway
Infrastructure Construction, operation and maintenance of the following:
|
Automatic route |
Non-Banking
Finance Companies (NBFC) Foreign investment in NBFC is allowed under the automatic route in only the following activities:
|
Automatic route |
Manufacturing | Automatic route |
E-commerce (Permitted in marketplace model and not the inventory based model. Also, it applies only to Business to Business e-commerce and not Business to Consumer e-commerce) | Automatic route |
Asset Reconstruction Company | Automatic route |
Credit Information Companies | Automatic route |
Civil Aviation (Ground Handling Services subject to sectoral regulations and security clearance) | Automatic route |
Civil Aviation (Maintenance and Repair organizations; flying training institutes; and technical training institutions) | Automatic route |
Air Transport Services ( Non-Scheduled and Helicopter services/seaplane services requiring DGCA approval) | Automatic route |
Airports (Greenfield and Brownfield) | Automatic route |
Pharmaceuticals ( Greenfield) | Automatic route |
White Label ATM Operations | Automatic route |
Trading (Cash & Carry Wholesale Trading/Wholesale Trading (including sourcing from MSEs) | Automatic route |
Industrial Parks (Greenfield and Brownfield) | Automatic route |
Broadcasting Carriage Services | Automatic route |
Mining (Except mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities) | Automatic route |
Mining (Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities) | Government route |
Satellites (Establishment and operation, subject to the sectoral guidelines of Department of Space/ISRO) | Government route |
RESTRICTED SECTORS
Up to 20% foreign ownership | |
Banking- Public
Sector (Subject to Banking Companies
(Acquisition & Transfer of Undertakings) Acts 1970/80) This ceiling (20%) is also applicable to the State Bank of India and its associate Banks. |
Government route |
Up to 26% foreign ownership | |
Print Media (Publishing of newspaper and periodicals dealing with news and current affairs and publication of Indian editions of foreign magazines dealing with news and current affairs) | Government route |
Up to 49% foreign ownership | |
Defence Industry subject to Industrial License under the Industries (Development & Regulation) Act, 1951; and manufacturing of small arms and ammunition under the Arms Act, 1959. |
|
Broadcasting
Content Services Terrestrial Broadcasting FM(FM Radio) and Up-linking of 'News & Current Affairs' TV Channels |
Government route |
Petroleum and Natural Gas (Petroleum refining by the Public Cabinet Committee Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs.) | Government route |
Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and Regional Air Transport Service |
|
Insurance | Automatic route |
Telecom
Services (Including Telecom Infrastructure Providers Category-I) All telecom services including Telecom Infrastructure Providers Category-I, viz. Basic, Cellular, United Access Services, Unified License (Access Services), Unified License, National/International Long Distance, Commercial V-Sat, Public Mobile Radio Trunked Services |
|
Single Brand
product retail trading Products to be sold should be of a "Single Brand" only |
|
Pension Sector | Automatic route |
Power
Exchanges (Power Exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010) |
Automatic route |
Infrastructure
Company in the Securities Market (namely, stock exchanges, commodity exchanges, depositories and clearing corporations, in compliance with SEBI Regulations) |
Automatic route |
Up to 74% foreign ownership | |
Banking- Private Sector |
|
Private Security Agencies |
|
Pharmaceuticals (Brownfield) |
|
PROHIBITED SECTORS
- Lottery Business including Government/private lottery, online lotteries etc.
- Gambling and Betting including casinos etc.
- Chit funds (Informal savings scheme practiced in India which accepts interest and lends money)
- Nidhi company ( Type of Mutual Benefit Fund Companies)
- Trading in Transferable Development Rights (TDRs)
- Real Estate Business or Construction of Farm Houses
- Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
- Activities/sectors not open to private sector investment are Atomic Energy and Railway operations
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.