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Review of Foreign Direct Investment (FDI) caps and routes in various sectors

Cabinet  Decision

The Union Cabinet today approved the proposal for review of Foreign Direct Investment (FDI) caps and routes in various sectors.

 

The Government has decided to amend the provisions relating to the FDI caps and routes in various sectors as under:

1.   Petroleum & Natural Gas

(Petroleum refining by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs.) (para 6.2.4.2)

 
 

 

FDI ceiling

 

Route

 

 
(a) Existing

 

49%

Government

 
(b) Proposed

 

49%

Automatic

 
2.   Commodity exchanges (para 6.2. 17.4)  
(a) Existing

 

49%(26%FDI+23%FII)

Government

 
(b) Proposed

 

49%(26%FDI+23%FII)

Automatic #

 
3.   Power exchanges (para 6.2.19)

 

 
(a) Existing

 

49%(26%FDI+23%FII)

Government

 
(b) Proposed

 

49%(26%FDI+23%FII)

Automatic

 
4.   Stock exchanges, depositories and clearing corporations (para 6.2.17.6.1)  
(a) Existing

 

49%(26%FDI+23%FII)

Government

 
 (b) Proposed

 

49%(26%FDI+23%FII)

Automatic

5.   Asset Reconstruction Company (para 6.2.17.1)
(a) Existing

 

74%(FDI + Fll)

Government             :

(b) Proposed

 

100%(FDI+FII)

Up to 49% Automatic 49% to 100% Government

6.   Credit Information Companies (CICs) (para 6.2.17.5)
(a) Existing

 

49% (FDI+FII)

Government

(b) Proposed

 

74%(FDI+FII)

Automatic

7.   Tea sector including tea plantations (para 6.2.2.1)
(a) Existing

 

100%   (divestment  of 26% to Indian partner within 5 years)

Government

(b) Proposed

 

100%

Government

8.   Single-brand product retail trading (para 6.2.1 6.4)

 

(a) Existing

 

100%

Government

(b) Proposed

 

100%

Up to 49% Automatic 49% to 100% Government ##

# Subject to guidelines issued by Department of Consumer Affairs/FMC.

## Existing paragraphs 6.2.16.4 (2) (d) and 6.2.16.4 (3) of `Circular 1 of 2013-Consolidated FDI Policy` will be replaced with following paragraphs:

Existing pargraphs Proposed paragraphs
6.2.16.4 (2) (d)

Only one non-resident entity, whether owner of the brand or otherwise, shall be permitted to undertake single brand product retail trading in the country, for the specific brand, through a legally tenable agreement, with the brand owner for undertaking single brand product retail trading in respect of the specific brand for which approval is being sought. The onus for ensuring compliance with this condition shall rest with the Indian entity carrying out single-brand product retail trading in India. The investing entity shall provide evidence to this effect at the time of seeking approval, including a copy of the licensing/ franchise/sub-licence agreement, specifically indicating compliance with the above condition.

 

 

6.2.16.4 (2) (d)

A non-resident entity or entities, whether owner of the brand or otherwise shall be permitted to undertake `Single Brand` product retail trading in the country for the specific brand, directly or through a legally tenable agreement with the brand owner for undertaking single
brand product retail trading. The
onus for ensuring compliance with
this condition will rest with the Indian
entity carrying out single brand
product retail trading in India. The
investing entity shall provide evidence
to this effect at the time of seeking
approval, including a copy of the
licensing/ franchise/sub-license
agreement, specifically indicating
compliance with the above condition.
The requisite evidence should be filed
with the RBI for the automatic route
and SIA/FIPB for cases involving
approval.

 

 

6.2.16.4 (3) Application seeking permission of the Government for FDI in retail trade of “Single Brand” products would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The applications would specifically indicate the product/ product categories which are proposed to be sold under a “Single Brand”. Any additional to the product/ product categories to be sold under Single Brand” would require a fresh approval of the Government.

 

6.2.16.4 (3) Application seeking permission of the Government for FDI exceeding 49% in a company which proposes to undertake single brand retail trading in India would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy and Promotion. The applications would specifically indicate the product/ product categories which are proposed to be sold under a “Single Brand”. Any addition to the product/ product categories to be sold under “Single Brand” would require a fresh approval of the Government. In case of FDI up to 49% the product/ product categories proposed to be sold except food products would be provided to the RBI.

 

9.   Test Marketing (para 6.2.16.3)
(a) Existing

 

100%.

Government

(b) Proposed

 

Para to be deleted.

 

10. Telecom Services ( including Telecom Infrastructure Providers Category-l)

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 TrunkedServices   (PMRTS),  Global  Mobile  Personal  Communications Services     (GMPCS),   All    types    of    ISP    licences,    Voice Mail/Audiotex/UMS, Resale of IPLC, Mobile Number Portability services, Infrastructure Provider Category-l (providing dark fibre, right of way, duct space, tower) except Other Service Providers.

 

(para 6.2.15.1, 6.2.15.2 and 6.2.15.3)

(a) Existing

 

74%.

Up to 49% Automatic 49% to 74% Government

(b) Proposed

 

100%

Up to 49% Automatic 49% to 100% Government@

11. Courier Services (para 6.2.10)
(a) Existing

 

100%

Government

(b) Proposed

 

100%

Automatic

12. Defence (para 6.2.6)
(a) Existing

 

26%

Government

(b) Proposed

 

26%-No change $

Up to 26%, no change i.e., through FIPB and CCEA if FDI exceeds Rs. 1200crore.

 

Above 26% to CCS on case to case basis, which ensure access to modern and `state-of-art` technology in thecountry.

@    FDI up to 100% with 49% under automatic route and beyond 49% through FIPB route subject to observance of licensing and security conditions by licensee    as    well   as    investors    as   notified   by   the    Department  of Telecommunications (DoT) from time to time.

$    Fll through portfolio investment is not permitted.

In the backdrop of the fairly modest FDI inflows over the last year and lack of growth in gross domestic capital formation, FDI ceilings and entry routes have been liberalized for the aforestated sectors with a view to stimulating FDI inflows in to the country thereby contributing to growth of investment, incomes and employment.

Tags: Cabinet of IndiaFDIFIIforeign direct investmentGovernmentIndiaManmohan SinghTea

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