NDA Govt brings major FDI policy reforms in host of sectors
Govt to allow 100% FDI under automatic route for trading of food products manufactured and/or produced in India
Cabinet approves liberalisation of FDI in defence sector up to 100%
Govt to allow 100% FDI through automatic route in broadcasting carriage services
Govt to allow 74% FDI under automatic route in brownfield pharmaceuticals

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its ex-post-facto approval for the FDI policy amendments announced by the Government on 20th June, 2016. The FDI policy 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 growth of investment, incomes and employment.  The details are as follows:

  1. Radical Changes for promoting Food Products manufactured/produced in India

It has now been provided that 100% FDI under automatic route for trading, including through e-commerce, is permitted in respect of food products manufactured and/or produced in India.

  1. Foreign Investment in Defence Sector up to 100%

Earlier FDI regime permitted 49% FDI participation in the equity of a company under automatic route. FDI above 49% was permitted through Government approval on case to case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country. In this regard, the following changes have inter-alia been brought in the FDI policy on this sector:

  1. 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.
  2. FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959. 
  1. Review of Entry Routes in Broadcasting Carriage Services

FDI policy on Broadcasting carriage services has also been amended. New sectoral caps and entry routes are as under:

 

Sector/Activity

New Cap and Route

5.2.7.1.1

(1)Teleports(setting up of up-linking HUBs/Teleports);

(2)Direct to Home (DTH);

(3)Cable Networks (Multi System operators (MSOs) operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability);

(4)Mobile TV;

(5)Headend-in-the Sky Broadcasting Service(HITS)

100%

 

Automatic

5.2.7.1.2 Cable Networks (Other MSOs not undertaking upgradation of networks towards digitalization and addressability and Local Cable Operators (LCOs))

Infusion of fresh foreign investment, beyond 49% in a company not seeking license/permission from sectoral Ministry, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require FIPB approval

  1. Pharmaceutical

The earlier FDI policy on pharmaceutical sector provides for 100% FDI under automatic route in greenfield pharma and FDI up to 100% under government approval in brownfield pharma. With the objective of promoting the development of this sector, 74% FDI under automatic route has been permitted in brownfield pharmaceuticals. FDI beyond 74% would be permitted through Government approval route.

  1. Civil Aviation Sector

(i)     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.

(ii)   With a view to aid in modernization 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.

(iii) 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 upto 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.

  1. Private Security Agencies

The earlier policy permitted 49% FDI under government approval route in Private Security Agencies. Since Private Security Agencies are already required to get license under PSAR Act 2005, the requirement of putting them through another line of Government approvals through FIPB has now been done away with for FDI up to 49%.  Accordingly, FDI up to 49% is now permitted under automatic route in this sector. FDI beyond 49% and upto 74% is permitted through Government approval route.

  1. Establishment of branch office, liaison office or project office

For establishment of branch office, liaison office or project office or any other place of business in India if the principal business of the applicant is Defence, Telecom, Private Security or Information and Broadcasting, it has provided that approval of Reserve Bank of India would not be required in cases where FIPB approval or license/permission by the concerned Ministry/Regulator has already been granted.

  1. Animal Husbandry

As per FDI Policy 2016, FDI in Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture and Apiculture is allowed 100% under Automatic Route under controlled conditions. The requirement of ‘controlled conditions’ for FDI in these activities has now been done away with.

  1. Single Brand Retail Trading

Local sourcing norms have been relaxed up to three years, with prior Government approval, for entities undertaking Single Brand Retail Trading of products having ‘state­ of ­art’ and ‘cutting edge’ technology. For such entities, sourcing norms will not be applicable up to three years from commencement of the business i.e. opening of the first store for entities undertaking single brand retail trading of products having ‘state-of-art’ and ‘cutting-edge’ technology and where local sourcing is not possible. Thereafter, sourcing norms would be applicable.

Background:

In last two years, Government has brought major FDI policy reforms in a number of sectors viz. Defence, Construction Development, Insurance, Pension Sector, Broadcasting Sector, Tea, Coffee, Rubber, Cardamom, Palm Oil Tree and Olive Oil Tree Plantations, Single Brand Retail Trading, Manufacturing Sector, Limited Liability Partnerships, Civil Aviation, Credit Information Companies, Satellites- establishment/operation and Asset Reconstruction Companies. Measures undertaken by the Government have resulted in increased FDI inflows at US$ 55.46 billion in financial year 2015-16, as against US$ 36.04 billion during the financial year 2013-14. This is the highest ever FDI inflow for a particular financial year. However, it was felt that the country has potential to attract far more foreign investment which can be achieved by further liberalizing and simplifying the FDI regime. 

Accordingly, Union Government radically liberalized the FDI regime on 20th June, 2016 with the objective of providing major impetus to employment and job creation in India. This was the second major reform after the last radical changes announced in November, 2015. Changes introduced in the policy included increase in sectoral caps, bringing more activities under automatic route and easing of conditionalities for foreign investment. The amendments were aimed at further simplifying the regulations governing FDI in the country and make India an attractive destination for foreign investors. Most of the sectors with these changes have now been brought under automatic route for FDI, except a small negative list. The amendments have made India the most open economy in the world for FDI.

Explore More
No ifs and buts in anybody's mind about India’s capabilities: PM Modi on 77th Independence Day at Red Fort

Popular Speeches

No ifs and buts in anybody's mind about India’s capabilities: PM Modi on 77th Independence Day at Red Fort
A Leader for a New Era: Modi and the Resurgence of the Indian Dream

Media Coverage

A Leader for a New Era: Modi and the Resurgence of the Indian Dream
NM on the go

Nm on the go

Always be the first to hear from the PM. Get the App Now!
...
Srinagar Viksit Bharat Ambassadors Unite for 'Viksit Bharat, Viksit Kashmir'
April 20, 2024

Srinagar hosted a momentous gathering under the banner of the Viksit Bharat Ambassador or VBA 2024. Held at the prestigious Radisson Collection, the event served as a unique platform, bringing together diverse voices and perspectives to foster the nation's collective advancement towards development.

Graced by the esteemed presence of Union Minister Shri Hardeep Singh Puri as the Chief Guest, the event saw the attendance of over 400 distinguished members of society, representing influencers, industry stalwarts, environmentalists, and young minds, including first-time voters. Presidents of Chambers of Commerce, Federation of Kashmir Industrial Corporation, House Boat Owners Association, and members of the writers' association were also present.

The VBA 2024 meetup began with an interesting panel discussion on Viksit Kashmir, which focused on the symbiotic relationship between industry growth and sustainable development. This was followed by an interactive session by Minister Puri, who engaged with the attendees through an engaging presentation. Another event highlight was the live doodle capture by a local artist of the discussions.

Union Minister Hardeep Singh Puri discussed how India has changed in the last decade. He said India is on track to become one of the world's top three economies, surpassing Germany and Japan soon.

 

"The country is set to surpass Germany and Japan and will become the world's third-largest economy by 2027-28," he said.

 

According to official estimates, India's economy is projected to reach a remarkable $40 trillion by 2040. Presently, the economy stands at approximately $3.5 trillion.

He also stressed that India's progress is incomplete without a developed Kashmir.

 

"Bharat cannot be Viksit without a Viksit Kashmir," he said.

Hardeep Puri reflected on India's economic journey, noting that in the 1700s, India contributed a significant 25% to the global GDP. However, as experts documented, this figure gradually dwindled to a mere 2% by 1947.

 

He highlighted how India, once renowned as the 'sone ki chidiya' (golden bird), lost its economic strength during British colonial rule and continued to struggle even after gaining independence, remaining categorized under the 'Fragile Five' until 2014.

 

Puri emphasized that the true shift in India's economic trajectory commenced under the Modi government. Over the past decade, the nation has ascended from among the top 11 economies to ranking among the top 5 globally.

The Union Minister also encouraged everyone to participate in the Viksit Bharat 2047 mission, emphasizing that achieving this dream requires the active engagement and coordination of all "ambassadors" of change.

He highlighted India's rapid progress in metro network development, stating that the operational metro network spans approximately 950 kilometres. He expressed confidence that within the next 2-3 years, India's metro network will expand to become the second-largest globally, surpassing that of the United States.

 

Regarding Jammu and Kashmir, he mentioned that through the Smart project, over 68 projects totalling Rs 6,800 crores were conceptualized, with Rs 3,200 crores worth of projects already completed.

 

He further stated that Jammu and Kashmir possesses more potential than Switzerland but has faced setbacks due to man-made crises. He emphasized the Modi government's dedication to the comprehensive development of the region.

The minister highlighted a significant government policy shift from women-centred to women-led development. Drawing from his extensive experience as a diplomat spanning 39 years, he shared that when a country transitions to women-led development, there is typically a substantial GDP increase of 20-30%. 

He mentioned that the government is actively pursuing this objective, citing examples such as the Awas Yojana, where houses are registered in the names of women household members, and the implementation of 33% reservation for women in elected bodies as part of this broader mission. 

He also provided insight into the transformative impact of the Modi government's welfare policies on people's lives. He highlighted the Ujjwala Yojana, noting that 32 crore individuals have received LPG cylinders, a significant increase from the 14 crore connections in 2014. Additionally, he mentioned the expansion of the gas pipeline network, which has grown from 14,000 km to over 20,000 km over the past ten years.

The Vision of Viksit Bharat: 140 crore dreams, 1 purpose 

The Viksit Bharat Ambassador movement aims to encourage citizens to take responsibility for contributing to India's development. VBA meet-ups and events are being organized in various parts of the country to achieve this goal. These events provide a platform for participants to engage in constructive discussions, exchange ideas, and explore practical strategies for contributing to the movement.

Join the movement on the NaMo App: https://www.narendramodi.in/ViksitBharatAmbassador

The NaMo App: Bridging the Gap

Prime Minister Narendra Modi's app, the NaMo App, is a digital bridge that empowers citizens to participate in the Viksit Bharat Ambassador movement. The NaMo App serves as a one-stop platform for individuals to:

Join the cause: Sign up and become a Viksit Bharat Ambassador and make 10 other people

Amplify Development Stories: Access updates, news, and resources related to the movement.

Create/Join Events: Create and discover local events, meet-ups, and volunteer opportunities.

Connect/Network: Find and interact with like-minded individuals who share the vision of a developed India.

The 'VBA Event' section in the 'Onground Tasks' tab of the 'Volunteer Module' of the NaMo App allows users to stay updated with the ongoing VBA events.