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    Case ID :

    Review of Foreign Direct Investment (FDI) caps and routes in various sectors.

    August 2, 2013

    📋
    Contents
    Summary
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    Cabinet Decision

    The Union Cabinet today approved the proposal for review of Foreign Direct Investment (FDI) caps and routes in various sectors.

    The Government has decided to amend the provisions relating to the FDI caps and routes in various sectors as under:

    1.     Petroleum & Natural Gas

    (Petroleum refining by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs.) (para 6.2.4.2)

     

     

    FDI ceiling

     

    Route

     

    (a) Existing

     

    49%

     

    Government

     

    (b) Proposed

     

    49%

     

    Automatic

     

    2.     Commodity exchanges (para 6.2. 17.4)

    (a) Existing

     

    49%(26%FDI+23%FII)

     

    Government

     

    (b) Proposed

     

    49%(26%FDI+23%FII)

     

    Automatic #

     

    3.   Power exchanges (para 6.2.19)

     

    (a) Existing

     

    49%(26%FDI+23%FII)

     

    Government

     

    (b) Proposed

     

    49%(26%FDI+23%FII)

     

    Automatic

     

    4.     Stock exchanges, depositories and clearing corporations (para 6.2.17.6.1)

    (a) Existing

     

    49%(26%FDI+23%FII)

     

    Government

     

    (b) Proposed

     

    49%(26%FDI+23%FII)

     

    Automatic

     

    5.   Asset Reconstruction Company (para 6.2.17.1)

    (a) Existing

     

    74%(FDI + Fll)

     

    Government             :

     

    (b) Proposed

     

    100%(FDI+FII)

     

    Up to 49% Automatic 49% to 100% Government

     

    6.   Credit Information Companies (CICs) (para 6.2.17.5)

    (a) Existing

     

    49% (FDI+FII)

     

    Government

     

    (b) Proposed

     

    74%(FDI+FII)

     

    Automatic

     

    7.   Tea sector including tea plantations (para 6.2.2.1)

    (a) Existing

     

    100%     (divestment of 26% to Indian partner within 5 years)

     

    Government

     

    (b) Proposed

     

    100%

     

    Government

     

    8.   Single-brand product retail trading (para 6.2.1 6.4)

     

    (a) Existing

     

    100%

     

    Government

     

    (b) Proposed

     

    100%

     

    Up to 49% Automatic 49% to 100% Government ##

     

    # Subject to guidelines issued by Department of Consumer Affairs/FMC.

    ## Existing paragraphs 6.2.16.4 (2) (d) and 6.2.16.4 (3) of `Circular 1 of 2013-Consolidated FDI Policy` will be replaced with following paragraphs:

    Existing pargraphs

    Proposed paragraphs

    6.2.16.4 (2) (d)

    Only one non-resident entity, whether owner of the brand or otherwise, shall be permitted to undertake single brand product retail trading in the country, for the specific brand, through a legally tenable agreement, with the brand owner for undertaking single brand product retail trading in respect of the specific brand for which approval is being sought. The onus for ensuring compliance with this condition shall rest with the Indian entity carrying out single-brand product retail trading in India. The investing entity shall provide evidence to this effect at the time of seeking approval, including a copy of the licensing/ franchise/sub-licence agreement, specifically indicating compliance with the above condition.

     

     

    6.2.16.4 (2) (d)

    A non-resident entity or entities, whether owner of the brand or otherwise shall be permitted to undertake `Single Brand` product retail trading in the country for the specific brand, directly or through a legally tenable agreement with the brand owner for undertaking single
    brand product retail trading. The
    onus for ensuring compliance with
    this condition will rest with the Indian
    entity carrying out single brand
    product retail trading in India. The
    investing entity shall provide evidence
    to this effect at the time of seeking
    approval, including a copy of the
    licensing/ franchise/sub-license
    agreement, specifically indicating
    compliance with the above condition.
    The requisite evidence should be filed
    with the RBI for the automatic route
    and SIA/FIPB for cases involving
    approval.

     

    6.2.16.4 (3) Application seeking permission of the Government for FDI in retail trade of "Single Brand" products would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The applications would specifically indicate the product/ product categories which are proposed to be sold under a "Single Brand". Any additional to the product/ product categories to be sold under Single Brand" would require a fresh approval of the Government.

     

    6.2.16.4 (3) Application seeking permission of the Government for FDI exceeding 49% in a company which proposes to undertake single brand retail trading in India would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy and Promotion. The applications would specifically indicate the product/ product categories which are proposed to be sold under a "Single Brand". Any addition to the product/ product categories to be sold under "Single Brand" would require a fresh approval of the Government. In case of FDI up to 49% the product/ product categories proposed to be sold except food products would be provided to the RBI.

     

    9.   Test Marketing (para 6.2.16.3)

    (a) Existing

     

    100%.

     

    Government

     

    (b) Proposed

     

    Para to be deleted.

     

    10. Telecom Services ( including Telecom Infrastructure Providers Category-l)

    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   licences,   Voice Mail/Audiotex/UMS, Resale of IPLC, Mobile Number Portability services, Infrastructure Provider Category-l (providing dark fibre, right of way, duct space, tower) except Other Service Providers.

     (para 6.2.15.1, 6.2.15.2 and 6.2.15.3)

    (a) Existing

     

    74%.

     

    Up to 49% Automatic 49% to 74% Government

     

    (b) Proposed

     

    100%

     

    Up to 49% Automatic 49% to 100% Government@

     

    11. Courier Services (para 6.2.10)

    (a) Existing

     

    100%

     

    Government

     

    (b) Proposed

     

    100%

     

    Automatic

     

    12. Defence (para 6.2.6)

    (a) Existing

     

    26%

     

    Government

     

    (b) Proposed

     

    26%-No change $

     

    Up to 26%, no change i.e., through FIPB and CCEA if FDI exceeds Rs. 1200 crore.

     Above 26% to CCS on case to case basis, which ensure access to modern and `state-of-art` technology in the country.

     

     @   FDI up to 100% with 49% under automatic route and beyond 49% through FIPB route subject to observance of licensing and security conditions by licensee   as   well   as   investors   as   notified   by   the   Department   of Telecommunications (DoT) from time to time.

    $   Fll through portfolio investment is not permitted.

    In the backdrop of the fairly modest FDI inflows over the last year and lack of growth in gross domestic capital formation, FDI ceilings and entry routes have been liberalized for the aforestated sectors with a view to stimulating FDI inflows in to the country thereby contributing to growth of investment, incomes and employment.

    Topics

    ActsIncome Tax