Cabinet approves recent changes in FDI policy

Tribune News Service

New Delhi, August 31

The government today gave ex-post-facto approval to the FDI policy amendments announced by the government earlier on June 20.

The approval came at the meeting of the Union Cabinet chaired by Prime Minister Narendra Modi. 

The amendments are meant to liberalise and simplify the FDI policy so as to provide ease of doing business in the country leading to larger FDI inflows contributing to the growth of investment, incomes and employment.

This includes allowing 100% FDI under automatic route for trading, including through e-commerce in respect of food products manufactured and/or produced in India and raising foreign investment in defence sector up to 100%.

Earlier, FDI regime permitted 49% FDI participation in the equity of a company under automatic route in the defence sector. FDI above 49% was permitted through government approval on a case to case basis.

As per changes, foreign investment beyond 49% has now been permitted through government approval route wherever it is likely to result in access to modern technology or for other reasons to be recorded.

Also, FDI limit for defence sector has also been made applicable to manufacturing of small arms and ammunition covered under the Arms Act, 1959.

The changes will also see a major transformation in the Civil Aviation sector.

The earlier FDI policy on Airports permitted 100% FDI under automatic route in Greenfield Projects and 74% FDI in Brownfield Projects under automatic route. FDI beyond 74% for Brownfield Projects is under government route.

However, with a view to aid in modernisation of the existing airports to establish a high standard and help ease the pressure on the existing airports, 100% FDI under automatic route has now been permitted in Brownfield Airport projects as well.

As per the earlier FDI policy, foreign investment up to 49% was allowed under automatic route in Scheduled Air Transport Service/Domestic Scheduled Passenger Airline and regional Air Transport Service.

This limit has now been raised to 100%, with FDI up to 49% permitted under automatic route and FDI beyond 49% through Government approval.

For NRIs, 100% FDI will continue to be allowed under automatic route. Foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and non-scheduled air-transport services up to the limit of 49% of their paid up capital.

The FDI policy on Broadcasting, Pharma, Civil Aviation, Private Security Agencies, Establishment of branch office, Animal Husbandry and Single Brand Retail has also been amended.