All you need to know about the new FDI norms

A look at all the changes that have been introduced for different sectors as per the new FDI regime

The Centre, on Monday, introduced changes in its foreign direct investment (FDI) regime. It opened up a few more sectors, where FDI can be pumped in, either via automatic route or through the approval of the government. 

Terming the measures to have made India ‘most open economy in the world’, the government stated that they would help in job creation. 

Business Standard takes a look at all the changes that have been introduced for different sectors. 

Promoting food products manufactured or produced in India
 

The Centre has decided to allow 100% FDI under government approval for trading food products that are made in India

Defence

Removal of a clause: Investment beyond 49% is now permitted via government approval in cases that result in access to modern technology in the country or for other reasons to be recorded. The condition of access to 'state-or-art' technology in India has been scrapped.

Investment limit for this sector is also applicable to manufacturing of small arms and ammunitions covered under Arms Act 1959.

Broadcasting Carriage Services

Direct to Home (DTH), teleports, cable networks, mobile TV, headend-in-the Sky Broacasting Service (HITS) has been opened up and 100% FDI through automatic route can now invested.

Pharmaceuticals

Up to 74% investment will be under automatic route, while the rest will need a government approval in brownfield pharma sector. Till now, approval was needed in the entire 100% investment in brownfield pharma.

Aviation

FDI in airports, in case of brownfield projects, is now under automatic route for the entire 100%. Earlier, the automatic route was available till 74% of equity. 

Government has increased FDI limit in scheduled air transport service/domestic scheduled passenger airline and regional air transport service to 100% from its current 49% cap. However, FDI up to 49% is permitted under automatic route, while investment beyodn that will need government approval. 

For NRIs, 100% FDI will continue to be allowed under automatic route. 

In case of foreign airlines, carriers will be allowed to invest in capital of Indian firms operating scheduled and non-scheduled air-transport services up to the limit of 49% of paid up capital and subject to laid down conditions in the current policy. 

Setting up branch office, liaison office or project office

If the principal business of the applicant is defence, telecom, private security or information and broadcasting, the approval of Reserve Bank of India or separate security clearance would not be required in cases where FIPB approval or license/permission by the concerned ministry/regulator has already been granted.

Animal Husbandry

Removal of clause: FDI in animal husbandry (including breeding of dogs), pisciculture, aquaculture and apiculture is allowed up to 100% under automatic route. The Centre has done away with the condition of this investment being under controlled conditions.

Single brand retail trading

The Centre decided to relax local sourcing norms up to three years. It also relaxed sourcing regime for another five years for firms undertaking single brand retail trading of products that have 'state-of-the-art' and 'cutting edge' technology.