Government raises caps on FDI for various sectors and also move sectors into the automatic route

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

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:  Sectors FDI ceiling Route1. 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)(a) Existing 49% Government(b) Proposed 49% Automatic2. Commodity exchanges (para 6.2. 17.4)(a) Existing 49%(26%FDI+23%FII) Government(b) Proposed 49%(26%FDI+23%FII) Automatic3. Power exchanges (para 6.2.19)(a) Existing 49%(26%FDI+23%FII) Government(b) Proposed 49%(26%FDI+23%FII) Automatic4. 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) Automatic5. 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% Government6. Credit Information Companies (CICs) (para 6.2.17.5)(a) Existing 49% (FDI+FII) Government(b) Proposed 74%(FDI+FII) Automatic7. 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% Government8. 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% Government9. 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 Trunked Services (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% Automatic12. 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. 1200 crore.Above 26% to CCS on case to case basis, which ensure access to modern and 'state-of-art' technology in the country.

@ 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.

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