With a view to strengthen the Foreign Investment policy, the Government has allowed 49% Foreign Portfolio Investment in many sectors through Automatic route in many of the sectors which include pharmaceuticals, single brand retail, insurance, pension etc. which allows the composite foreign investment caps in all the sectors barring private banking and defence sectors.
Earlier, these sectors had lower caps for the automatic route. For instance, in the insurance and pension sectors, FPI of up to 26 per cent was allowed through the automatic route, while in pharma, any investment would require the government™s prior permission.
The government allowed composite caps for the sectors, instead of the earlier practice of separate caps for FDI and FPI as now there will be complete fungibility across all the sectors and Foreign Institutional Investors as now upto 49%will be allowed automatically.
As the government made foreign investment fungible, foreign investments would include FDI, FPI, investment from non-resident Indians and foreign venture capital investment.