FDI IN DIFFERENT SECTORS IN INDIA & GOVERNMENT MEASURES - AT A GLANCE
The Government eased FDI norms in November 2015 in 15 major sectors, raising the Foreign Investment Promotion Board (FIPB) approval limit from Rs 3,000 crore to Rs 5,000 crore. In defence, the government has allowed foreign investment up to 49 percent under the automatic route, earlier under the government approval route. Investments over 49 percent will now be cleared by the FIPB instead of the Cabinet Committee on Security. Portfolio investors and foreign venture capital firms can also invest up to 49 percent as against 24 percent earlier. In banking, the government has introduced full fungibility, meaning FIIs/ FPIs/ QFIs can now invest up to the sectoral limit of 74 percent subject to the condition that there is no change in control and management of the private bank. Manufacturers have been allowed to sell their products through e-commerce without government approval. Recently, 100% Foreign Direct Investment (FDI) is permissible in online retails through automatic Route in India.
Apart from this, the government is currently working on a proposal to completely ban foreign direct investment (FDI) in the tobacco sector. At present, FDI is permitted in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contract in the tobacco sector. The Commerce and Industry Ministry is proposing to even ban FDI in licensing for franchise, trademark, brand name and management contract in the sector which would eventually mean that FDI would be totally banned in tobacco segment in any form.
India, in early May 2016, signed the protocol amending the Double Taxation Avoidance Agreement (DTAA) with Mauritius. The DTAA was a major reason for a large number of foreign portfolio investors (FPI) and foreign entities to route their investments in India through Mauritius. FIPB will also take up 12 FDI proposals on May 20th, 2016 . NRI investments in real estate have also been simplified to encourage the inflow of funds. The Government of India has put in place a liberal and transparent policy for investment from overseas Indians. Most of the sectors are open to Foreign Direct Investment (FDI) under the automatic route. Indian holding Indian passports and PIOs to buy residential and commercial properties in India.
SECTORS WHERE FDI IS NOT ALLOWED IN INDIA UNDER THE AUTOMATIC ROUTE AS WELL AS THE GOVERNMENT ROUTE
FDI is prohibited under Government as well as Automatic Route for the following sectors:
- Retail Trading
- Atomic Energy
- Lottery Business
- Gambling and Betting
- Housing and Real Estate business
- Agriculture (excluding Floriculture, Horticulture, Development of Seeds, Animal Husbandry, Pisciculture and Cultivation of Vegetables, Mushrooms etc. under controlled conditions and services related to agro and allied sectors).
- Plantations (Other than Tea plantations).
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