Wednesday, June 22, 2016

Govt. allows 100% FDI in e-commerce, aviation and defense

With the objective of providing major impetus to employment and job creation in India, the Government has brought major FDI policy reforms in a number of sectors viz. Defence, Construction Development, Insurance, Pension Sector, Broadcasting Sector, Single Brand Retail Trading, Manufacturing Sector, LLPs, Civil Aviation, Credit Information Companies, Satellites- establishment/operation and Asset Reconstruction Companies. These amendments seek to further simplify the regulations governing FDI in the country and make India an attractive destination for foreign investors. The Key highlights of amended FDI policy are as follows:

1. Foreign Investment in Defence Sector up to 100%: Foreign investment beyond 49 % has now been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded. The condition of access to ‘state-of-art’ technology in the country has been done away with. 

2. FDI in Civil Aviation sector: Govt. has allowed 100% FDI in aviation sector under automatic route in Greenfield Projects and 74% FDI in Brownfield Projects under automatic route.

3. Changes for promoting Food Products manufactured/produced in India: It has now been decided to permit 100% FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India. 

4. Private Sector Agencies: The extant policy permits 49% FDI under government approval route in Private Security Agencies. FDI up to 49% has now been permitted under automatic route in this sector and FDI beyond 49% and up to 74% would be permitted with government approval route.

 5. Establishment of branch office, liasion office or project office: For establishment of branch office, liasion office or Project office or any other place of business in India if the principal office of the applicant is Defence, Telecom, Private Security or Information and Broadcasting, it has been decided that 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.

6. Animal Husbandry: As per FDI Policy 2016, FDI in Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture and Apiculture was allowed 100% under Automatic Route subject to controlled conditions. However, it has been decided to do away with this requirement of 'controlled conditions' for FDI in these activities.

7. Single Brand Retail Trading: It has now been decided to relax local sourcing norms up to three years and a relaxed sourcing regime for another five years for entities undertaking Single Brand Retail Trading of products having 'state-of-art' and 'cutting edge' technology.

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