Revised Guidelines on FDI - Sector Specific condition for Foreign Investors

CONTENTS

S. No.	Sector/Activity	Page No.
A	Prohibited Sectors	3
B	Permitted Sectors	4
1	Agriculture	4
1.1	Agriculture & Animal Husbandry	4
1.2	Plantation Sector	4
2	Mining and Petroleum & Natural Gas	5
2.1	Mining	5
2.2	Petroleum & Natural Gas	6
3	Manufacturing	6
3.1	Manufacturing	6
3.2	Defence	6
4	Services Sector	7
4.1	Broadcasting	7
4.2	Print Media	8
4.3	Civil Aviation	8
4.4	Construction Development: Townships, Housing, Built-up Infrastructure	9
4.5	Industrial Parks	9
4.6	Satellites- establishment and operation	9
4.7	Private Security Agencies	10
4.8	Telecom Services	10
4.9	Trading	10
4.10	Railway Infrastructure	11
5	Financial Services	12
5.1	Asset Reconstruction Companies	12
5.2	Banking- Private Sector	12
5.3	Banking- Public Sector	12
5.4	Credit Information Companies (CIC)	12
5.5	Infrastructure Company in the Securities Market	13
5.6	Insurance	13
5.7	Pension Sector	13
5.8	Power Exchanges	13
5.9	White Label ATM Operations	13
5.10	Non-Banking Finance Companies (NBFC)	14
6	Others	14
6.1	Pharmaceuticals	14

Introduction

The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India recently released the new consolidated foreign direct investment (FDI) policy (New FDI Policy). The New FDI Policy has been made effective immediately from the date of its publication, i.e., 4^th January 2018 updated up to 8^th March, 2019.

The Union Government has “radically liberalised” the FDI regime and opened up multiple sectors for 100 per cent FDI. Most of the sectors would be under automatic approval route, except a small negative list. With these changes, India is now the most open economy in the world for FDI.

Details of Sector-wise condition on FDI are here-in-below;

Prohibited Sectors

FDI is prohibited in:

Lottery Business including Government/private lottery, online lotteries, etc
Gambling and Betting including casinos etc.
Chit funds
Nidhi company
Trading in Transferable Development Rights (TDRs)
Real Estate Business or Construction of Farm Houses – ‘Real estate business’ shall not include development of townships, construction of residential /commercial premises, roads or bridges and Real Estate Investment Trusts (REITs) registered and regulated under the SEBI (REITs) Regulations 2014.
Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
Activities/sectors not open to private sector investment e.g.(I) Atomic Energy and (II) Railway operations(other than permitted activities mentioned in para 5.2).

Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities.

Permitted Sectors

In the following sectors/activities, FDI up to the limit indicated against each sector/activity is allowed, subject to applicable laws/regulations; security and other conditionality. In sectors/activities not listed below, FDI is permitted up to100% on the automatic route, subject to applicable laws/regulations; security and other conditionality.

2. Agriculture

- Agriculture & Animal Husbandry

Sector/Activity

% of Equity/FDI Cap

Entry Route

a) Floriculture, Horticulture, Apiculture and Cultivation of Vegetables & Mushrooms under controlled conditions;

b) Development and Production of seeds and planting material;

c) Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture, under controlled conditions; and

d) Services related to agro and allied sectors

Note: Besides the above, FDI is not allowed in any other agricultural sector/activity

100%

Automatic

- Plantation Sector

Sector/Activity

% of Equity/ FDI Cap

Entry Route

Tea sector including tea plantations

(ii) Coffee plantations

(iii) Rubber plantations

(iv) Cardamom plantations

(v) Palm oil tree plantations

(vi) Olive oil tree plantations

Note: Besides the above, FDI is not allowed in any other plantation sector/activity.

100%

Automatic

3. Mining and Petroleum & Natural Gas

- Mining

Sector/Activity	% of Equity/ FDI Cap	Entry Route
Mining and Exploration of metal and non-metal ores including diamond, gold, silver and precious ores but excluding titanium bearing minerals and its ores; subject to the Mines and Minerals (Development & Regulation) Act, 1957.	100%	Automatic
Coal & Lignite (1) Coal & Lignite mining for captive consumption by power projects, iron & steel and cement units and other eligible activities permitted under and subject to the provisions of Coal Mines (Nationalization) Act, 1973. (2) Setting up coal processing plants like washeries subject to the condition that the company shall not do coal mining and shall not sell washed coal or sized coal from its coal processing plants in the open market and shall supply the washed or sized coal to those parties who are supplying raw coal to coal processing plants for washing or sizing.	100%	Automatic
Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities. Mining and mineral separation of titanium bearing minerals & ores, its value addition and integrated activities subject to sectoral regulations and the Mines and Minerals (Development and Regulation Act 1957).	100%	Government

- Petroleum & Natural Gas

Sector/Activity

% of Equity/ FDI Cap

Entry Route

Exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products and natural gas, marketing of natural gas and petroleum products, petroleum product pipelines, natural gas/pipelines, LNG Regasification infrastructure, market study and formulation and Petroleum refining in the private sector, subject to the existing sectoral policy and regulatory framework in the oil marketing sector and the policy of the Government on private participation in exploration of oil and the discovered fields of national oil companies.

100%

Automatic

Petroleum refining by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs.

49%

Automatic

4. Manufacturing

- Manufacturing

Subject to the provisions of the FDI policy, foreign investment in ‘manufacturing’ sector is under automatic route. Further, a manufacturer is permitted to sell its products manufactured in India through wholesale and/or retail, including through e-commerce without Government approval.

- Defence

Sector/Activity

% of Equity/

FDI Cap

Entry Route

Defence Industry subject to Industrial license under the Industries (Development & Regulation) Act, 1951

100%

Automatic up to 49%

Above 49% under Government route on case to case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country.

5. Services Sector

- Broadcasting
  - Broadcasting Carriage Services

Sector/Activity

% of Equity/

FDI Cap

Entry Route

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 up to 49%

Government route beyond 49%

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

100%

Automatic up to 49%

Government route beyond 49%

- Broadcasting Content Services

Sector/Activity	% of Equity/ FDI Cap	Entry Route
Terrestrial Broadcasting FM (FM Radio), subject to such terms and conditions, as specified from time to time, by Ministry of Information & Broadcasting, for grant of permission for setting up of FM Radio stations	49%	Government
Up-linking of ‘News & Current Affairs’ TV Channels	49%	Government
Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels	100%	Automatic

- Print Media

Sector/Activity	% of Equity/ FDI Cap	Entry Route
Publishing of newspaper and periodicals dealing with news and current affairs	26%	Government
Publication of Indian editions of foreign magazines dealing with news and current affairs	26%	Government

- Civil Aviation
  - Airports

Sector/Activity

% of Equity/ FDI Cap

Entry Route

(a) Greenfield projects

100%

Automatic

(b) Existing projects

100%

Automatic up to 74%

Government route beyond 74%

- Air Transport Services

Sector/Activity	% of Equity/FDI Cap	Entry Route
(1) (a) Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline (b) Regional Air Transport Service	49% FDI (100% for NRIs and OCI’s)	Automatic
(2)Non-Scheduled Air Transport Service	100%	Automatic
(3)Helicopter services/seaplane services requiring DGCA approval	100%	Automatic

- Other services under Civil Aviation sector

Sector/Activity	% of Equity/FDI Cap	Entry Route
(1)Ground Handling Services subject to sectoral regulations and security clearance	100%	Automatic
(2)Maintenance and Repair organizations; flying training institutes; and technical training institutions.	100%	Automatic

- Construction Development: Townships, Housing, Built-up Infrastructure

Sector/Activity

%% of Equity/ FDI Cap

Entry Route

5.2.10.1

Construction-development projects (which would include development of townships, construction of residential/commercial premises, roads or bridges, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure, townships)

100%

Automatic

- Industrial Parks

Sector/Activity	% of Equity/FDI Cap	Entry Route
Industrial Parks -new and existing	100%	Automatic

- Satellites- establishment and operation

Sector/Activity	% of Equity/FDI Cap	Entry Route
Satellites- establishment and operation, subject to the sectoral guidelines of Department of Space/ISRO	100%	Government

- Private Security Agencies

Sector/Activity	% of Equity/FDI Cap	Entry Route
Private Security Agencies	49%	Government

- Telecom Services

Sector/Activity

% of Equity/FDI Cap

Entry Route

Telecom Services

(including Telecom Infrastructure Providers Category-I)

All telecom services including Telecom Infrastructure Providers Category-I, viz. Basic, Cellular, United Access Services, Unified License (Access Services), Unified License, National/International Long Distance, Commercial V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS), All types of ISP licenses, Voice Mail/Audiotex/UMS, Resale of IPLC, Mobile Number Portability Services, Infrastructure Provider Category-I (providing dark fibre, right of way, duct space, tower) except Other Service Providers.

100%

Automatic up to 49%

Government route beyond 49%

- Trading
  - Cash & Carry Wholesale Trading/ Wholesale

Sector/Activity	% of Equity/FDI Cap	Entry Route
Cash & Carry Wholesale Trading/Wholesale Trading (including sourcing from MSEs)	100%	Automatic

- E-commerce activities

Sector/Activity	% of Equity/FDI Cap	Entry Route
E-commerce activities	100%	Automatic

- Single Brand product retail trading

Sector/Activity

% of Equity/FDI Cap

Entry Route

Single Brand product retail trading

100%

Automatic up to 49%

Government route beyond 49%

- Multi Brand Retail Trading

Sector/Activity	% of Equity/FDI Cap	Entry Route
Multi Brand Retail Trading	51%	Government

- Duty Free Shops

Sector/Activity	% of Equity/ FDI Cap	Entry Route
Duty Free Shops	100%	Automatic

- Railway Infrastructure

Sector/Activity

% of Equity/FDI Cap

Entry Route

Railway Infrastructure

Construction, operation and maintenance of the following:

(i) Suburban corridor projects through PPP, (ii) High speed train projects, (iii) Dedicated freight lines, (iv) Rolling stock including train sets, and locomotives/coaches manufacturing and maintenance facilities, (v) Railway Electrification, (vi) Signaling systems, (vii) Freight terminals, (viii) Passenger terminals, (ix) Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivity to main railway line and (x) Mass Rapid Transport Systems.

100%

Automatic

Financial Services

- Asset Reconstruction Companies

Sector/Activity

% of Equity/

FDI Cap

Entry Route

5.2.17.1‘Asset Reconstruction Company’ (ARC) means a company registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

100%

Automatic

- Banking- Private Sector

Sector/Activity

% of Equity/ FDI Cap

Entry Route

Banking- Private Sector

74%

Automatic up to 49%

Government route beyond 49% and up to 74%.

- Banking- Public Sector

Sector/Activity	% of Equity/FDI Cap	Entry Route
5.2.19.1 Banking- Public Sector subject to Banking Companies (Acquisition & Transfer of Undertakings) Acts 1970/80. This ceiling (20%) is also applicable to the State Bank of India and its associate Banks.	20%	Government

- Credit Information Companies (CIC)

Sector/Activity

% of Equity/ FDI Cap

Entry Route

5.2.20.1

Credit Information Companies

100%

Automatic

- Infrastructure Company in the Securities Market

Sector/Activity	% of Equity/ FDI Cap	Entry Route
5.2.21.1Infrastructure companies in Securities Markets, namely, stock exchanges, commodity exchanges, depositories and clearing corporations, in compliance with SEBI Regulations	49%	Automatic