Major Policy Change: Government Introduces 100% FDI In Almost All Sectors
June 20th, 2016
The Central government of India to give a major impetus to the country’s economy, radically liberalised the Foreign Direct Investment (FDI) regime by approving 100 percent FDI under government approval route for almost every sector, including defence, civil aviation and pharmaceuticals.
The decision was taken today at a meeting presided by Prime Minister Narendra Modi. This is the second biggest reform in FDI after November 2015.
The defence sector that had a cap of 49% of FDI, is now 100% open, 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 in the country has been done away with. The policy is also applicable to the manufacturing of small arms and ammunitions, which was earlier outside the purview of the policy.
The government has also allowed 100 percent FDI in civil aviation, animal husbandry and trading, including through e-commerce, in respect of food products manufactured or produced in India.
The extant FDI policy on pharmaceutical sector provides for 100 percent FDI under automatic route in greenfield pharma and FDI up to 100 per cent under government approval in brownfield pharma.
To modernise the existing airports and make it high-standardised, 100 percent FDI will be permitted in Greenfield Projects and 74 percent FDI in Brownfield Projects.
The FDI policy on broadcasting carriage services has also been amended to enable 100 percent FDI in teleports, DTH, Cable Networks, mobile TVs, and Headend-in-the-Sky Broadcasting Service.
However, FDI policy still prohibits lottery, gambling, atomic energy, real estate ad Real Estate Investments Trusts (REIT) and railway operations.
For Single Brand Retail Trading of products having ‘state-of-art’ and ‘cutting edge’ technology, example Apple, the government has decided to relax local sourcing norms up to three years and a relaxed sourcing regime for another five years. These means companies like Apple can easily enter the Indian market