New foreign investment initiatives announced in India

Posted: 19/07/2013

The Government of India has announced a range of initiatives to augment foreign investment in the country, including further opening up more than 20 sectors for foreign investment; fundamental changes in the way foreign investment is viewed by investors; and categorisation of activities based on which foreign investment should be allowed.

The following sectors have been further liberalised in the current round of reform announcements:

Telecoms - the foreign direct investment (FDI) limit in the telecoms services sector will be increased from the present 74% up to 100%.

Asset reconstruction companies - the foreign investment limit in asset reconstruction companies will be increased from the present 74% up to 100%. However, any foreign investment above 49% would require prior Government approval;

Single brand retail trading - at present, up to 100% FDI is permitted in single brand retail trading subject to prior Government approval. It has been decided to bring the first 49% FDI under the automatic route. FDI above 49% will continue to require Government approval;

Petroleum and natural gas refining - FDI in the petroleum and natural gas refining sector by public sector undertakings has been approved up to 49% under the automatic route. Under the existing policy, this required prior Government approval;

Commodity exchanges, power exchanges, stock exchanges - foreign investment in commodities exchanges, power exchanges and other infrastructure companies in the securities market (ie stock exchanges, depositories and clearing corporations) has been approved up to 49% under the automatic route. Under the existing policy, FDI in this sector required prior Government approval;

Courier services - FDI in courier services has been approved up to 100% under the automatic route. Under the existing policy, this required prior Government approval;

Credit information companies - foreign investment in credit information companies has been increased from 49% to 74% under the automatic route. Under the existing policy, foreign investment was permitted up to 49% with prior Government approval; and

Defence - the defence sector will continue to be under the Government approval route and any proposal for FDI above 26% will require clearance by the Cabinet Committee on Security, which will take into account if the FDI proposal results in an inflow of modern defence technology into the country.