Govt 'radically liberalises' the FDI regime

The Government of India has revised the Foreign Direct Investment (FDI) cap taking it upto 100% limit in some sectors such as food products, defence, broadcasting carriage services, pharmaceutical, civil aviation, among others.

The decision was taken at a high-level meeting chaired by the Prime Minister Narendra Modi on Monday. 

The government's latest amendements in FDI policy are aimed to provide ease of doing business in the country which will result in increase in FDI inflows leading to rise in investment, incomes and employment. 

Here's a list of sectors where the government has changed the FDI rules: 

1. Food products

In order to promote the investment in food products manufactured or produced in India,  it has decided to permit 100% FDI under the government approval route for trading, including through e-commerce, the Press Information Bureau's press release said on Monday. 

2. Defence

After the latest revision, foreign investment beyond 49% will now be permitted through government approval route, in cases  resulting in access to modern technology in the country or for other reasons to be recorded. 

At present, FDI investment of 49% is permissible in the defence sector in the equity of a company  under automatic route. 

The government has done away with the condition of access to 'state-of-art' technology in the country. 

Moreover, the FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959, the release noted. 

3. Broadcasting carriage services

The government will now permit 100% FDI via automatic route in teleports, Direct to home (DTH), cable networks, Mobile TV,  and Headend-in-the Sky Broadcasting Service (HITS). 

The release noted that infusion of fresh foreign investment, beyond 49% in a company not seeking license/permission from sectoral Ministry, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require foreign investment promotion board (FIPB) approval. 

4. Pharmaceutical

The government will now permit up to 74% FDI under automatic route in brownfield pharmaceuticals. However, government's approval route beyond 74% will still continue. 

The existing FDI policy on pharmaceutical sector provides for 100% FDI under automatic route in greenfield pharma and FDI up to 100% under government approval in brownfield pharma. 
 
5. Civil aviation 

In an attempt to modernise the existing airports to establish a high standard and help ease the pressure on the existing airports, the government has decided to permit 100% FDI under automatic route in Brownfield Airport projects.  

The present FDI policy in the civil aviation sector permits only 74% in Brownfield projects under automatic route and beyond 74% FDI in Brownfield project is under government route.  

The existing FDI policy allows 100% investment under automatic route in Greenfield projects. 

The government has  decided to raise the FDI cap to 100% on Scheduled Air Transport Service or Domestic Scheduled Passenger Airline and Regional Air Transport service, with FDI up to 49% permitted under automatic route and FDI above 49% through government approval.   

The government has kept 100% FDI limit for NRIs under automatic route. 
 
6. Private security agencies 

According to new norms, FDI up to 49% will be permitted under automatic route in private security agencies and above 49% and up to 74% will require the government's approval.  The existing policy permits 49% FDI under government approval route in the sector. 

7. Animal husbandry 

The government has removed the 'controlled conditions' essential for 100% FDI approval in animal husbandry sector under automatic route.