AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
Foreign Investment in India - Sector Specific conditions.
X X X X Extracts X X X X
X X X X Extracts X X X X
.... policy changes vide FDI Policy Circular 1 of 2012 dated April 10, 2012 and the same is available at Government website www.dipp.gov.in. In order to bring uniformity in the sectoral classification position for FDI as notified under the Consolidated FDI Policy Circular with the FEMA Regulation, the revised position on Annex A and Annex B of Schedule 1 to Notification No. FEMA 20/2000-RB dated 3rd May 2000, has been suitably revised and is enclosed. 3. Necessary amendments to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 notified vide Notification No.FEMA 20/2000-RB dated May 3, 2000 will be issued separately. 4. AD Category - 1 banks may bring the contents of this circular to the notice of their constituents and customers concerned. 5. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law. Yours faithfully, (Rudra Narayan Kar) Chief General Manager ============= Document 1 Annex. A [Annex to A. P.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....des the above, FDI is not allowed in any other agricultural sector/activity Automatic Sl.No. Sector/Activity 1.1 Other conditions: % of FDI Entry Route Cap/Equity I. For companies dealing with development of transgenic seeds/vegetables, the following conditions apply: (i) When dealing with genetically modified seeds or planting material the company shall comply with safety requirements in accordance with laws enacted under the Environment (Protection) Act on the genetically modified organisms. (ii) Any import of genetically modified materials if required shall be subject to the conditions laid down vide Notifications issued under Foreign Trade (Development and Regulation) Act, 1992. (iii) The company shall comply with any other Law, Regulation or Policy governing genetically modified material in force from time to time. (iv) Undertaking of business activities involving the use of genetically engineered cells and material shall be subject to the receipt of approvals from Genetic Engineering Approval Committee (GEAC) and Review Committee on Genetic Manipulation (RCGM). (v) Policy. II. Import of mat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3.1 % of Cap/Equity FDI Entry Route Mining and Exploration of metal 100% 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. Automatic 3.2 Coal and Lignite (1) Coal & Lignite mining for captive 100% Automatic 3.3 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 100% Automatic 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. Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities 7 Sl.No. 3.3.1 3.3.2 Sector/Activity Mining and mineral separa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... dated 18.1.2006 issued by the Department of Atomic Energy. Clarification: (1) For titanium bearing ores such as Ilmenite, Leucoxene and Rutile, manufacture of titanium dioxide pigment and titanium sponge constitutes value addition. Ilmenite can be processed to produce 'Synthetic Rutile or Titanium Slag as an intermediate value added product. (2) The objective is to ensure that the raw material available in the country is utilized for setting up downstream industries and the technology available internationally is also made available for setting up such industries within the country. Thus, if with the technology transfer, the objective of the FDI Policycan be achieved, the conditions prescribed at (i) (A) above shall be deemed to be fulfilled. Exploration activities of oil and 100% 4 Petroleum & Natural Gas 4.1 natural gas fields, infrastructure related to marketing of petroleum Automatic products and natural gas, marketing of natural gas and petroleum products, petroleum product pipelines, natural gas/pipelines, LNG 9 Sl.No. 4.2 5 5.1 Sector/Activity Regasification infrastructure, market stud....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d as well as the Chief Executives of the company / partnership firm being resident Indians. (iv) Full particulars of the Directors and the Chief Executives should be furnished along with the applications. (v) The Government reserves the right to verify the antecedents of the foreign collaborators and domestic promoters including their financial standing and credentials in the world market. Preference would be given to original equipment manufacturers or design establishments, and companies having a good track record of past supplies to Armed Forces, Space and Atomic energy sections and having an established R &D base. 11 Sl.No. Sector/Activity % of FDI Entry Route Cap/Equity (vi) There would be no minimum capitalization for the FDI. A proper assessment, however, needs to be done by the management of the applicant company depending upon the product and the technology. The licensing authority would satisfy itself about the adequacy of the net worth of the non-resident investor taking into account the category of weapons and equipment that are proposed to be manufactured. (vii) There would be a three-year lock-in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e sold within the country to any other person or entity. The export of manufactured items would be subject to policy and guidelines as applicable to Ordnance Factories and Defence Public Sector Undertakings. Non-lethal items would be permitted for sale to persons / entities other than the Central of State Governments with the prior approval of the Ministry of Defence. Licensee would also need to institute a verifiable system of removal of all goods out of their factories. Violation of these provisions may lead to cancellation of the licence. 13 Sl.No. Sector/Activity % of FDI Entry Route Cap/Equity (xv) Government decision on applications to FIPB for FDI in defence industry sector will be normally communicated within a time frame of 10 weeks from the date of acknowledgement. SERVICES SECTOR INFORMATION SERVICES 7 7.1 7.2 7.3 7.4 7.4.1 Broadcasting Terrestrial Broadcasting FM (FM Radio) subject to such terms and conditions as specified from time to time by Ministry of Information and Broadcasting for grant of permission for setting up of FM Radio Stations Cable Network, subject to Cabl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... requirement through the Company Secretary at the end of each financial year. (ii) FDI for Up-linking TV Channels will be subject to compliance with the Up-linking Policy notified by the Ministry of Information & Broadcasting from time to time. Print Media Publishing of Newspaper and 26% periodicals dealing with news and current affairs Publication of Indian editions of foreign magazines dealing with news and current affairs Other Conditions: (FDI and Government by investment NRIS/PIOS/FII) 26% (FDI investment NRIS/PIOS/FII) and Government by (i) [Magazine', for the purpose of these guidelines, will be defined as a periodical publication, brought out on non-daily basis, containing public news or comments on public news. (ii) Foreign investment would also be subject to the Guidelines for Publication of Indian editions of foreign magazines dealing with news 15 Sl.No. Sector/Activity 8.3 % of FDI Entry Route Cap/Equity and current affairs issued by the Ministry of Information & Broadcasting on 4.12.2008. Publishing/printing of Scientific and Technical Magazines/specialty ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns any part, the soundness and correct functioning of which, when fitted to an aircraft, is essential to the continued airworthiness or safety of the aircraft and includes any item of equipment; (vi)"Helicopter" means a heavier-than-air aircraft supported in flight by the reactions of the air on one or more power driven rotors on substantially vertical axis; (vii) "Scheduled air transport service" means an air transport service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, each flight being open to use by members of the public; (viii) “Non-Scheduled Air Transport service†means any service which is not a scheduled air transport service and will include Cargo airlines; (ix)"Cargo airlines†would mean such airlines which meet the conditions as given in the Civil Aviation Requirements issued by the Ministry of Civil Aviation; 17 17 Sl.No. Sector/Activity % of Cap/Equity FDI Entry Route (x) "Seaplane" means an aeroplane capable normally of taking off fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elopment projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure) 100% Investment will be subject to the following conditions: Automatic (1) Minimum area to be developed under each project would be as under: (i) In case of development of serviced housing plots, a minimum land area of 10 hectares (ii) In case of construction-development projects, a minimum built-up area of 50,000 sq.mts 19 Sl.No. Sector/Activity % of FDI Entry Route Cap/Equity (iii) In case of a combination project, any one of the above two conditions would suffice (2) Minimum capitalization of US$10 million for wholly owned subsidiaries and US$ 5 million for joint ventures with Indian partners. The funds would have to be brought in within six months of commencement of business of the Company. (3) Original investment cannot be repatriated before a period of three years from completion of minimum capitalization. Original investment means the entire amount brought in as FDI. The lock-in pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct in which quality infrastructure in the form of plots of developed land or built up space or a combination with common facilities, is developed and made available to all the allottee units for the purposes of industrial activity. (ii) "Infrastructure" refers to facilities required for functioning of units located in the Industrial Park and includes roads (including approach roads), water supply and sewerage, common effluent treatment facility, telecom network, generation and distribution of power, air conditioning. (iii) "Common Facilities†refer to the facilities available for all the units located in the industrial park, and include facilities of power, roads (including approach roads), water supply and sewerage, common effluent treatment, common testing, telecom services, air conditioning, common facility buildings, industrial canteens, convention/conference halls, parking, travel desks, security service, first aid center, 21 Sl.No. Sector/Activity % of FDI Entry Route Cap/Equity ambulance and other safety services, training facilities and such other facilities meant for common use of the units located in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se of Basic, Cellular, Unified Access Services, National International Long Distance, V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS) and other value added Services. (ii) Both direct and indirect foreign investment in the licensee company shall be counted for the purpose of FDI ceiling. Foreign Investment shall include investment by Foreign Institutional Investors (FIIs), Non- resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible preference shares held by foreign 23 23 Sl.No. Sector/Activity % of FDI Entry Route Cap/Equity entity. In any case, the `Indian' shareholding will not be less than 26 Percent. (iii) FDI in the licensee company/Indian promoters/investment companies including their holding companies shall require approval of the Foreign Investment Promotion Board (FIPB) if it has a bearing on the overall ceiling of 74 percent. While approving the investment proposals, FIPB shall take note that investment is not coming from countries of concern and/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce to roaming subscriber of foreign Companies, the Indian Company shall endeavour to obtain traceable identity of roaming subscribers from the foreign company as a part of its roaming agreement. (x) On request of the licensor or any other agency authorised by the licensor, the telecom service provider should be able to provide the geographical location of any subscriber (BTS location) at a given point of time. 25 25 Sl.No. Sector/Activity % of Cap/Equity FDI Entry Route (xi) The Remote Access (RA) to Network would be provided only to approved location(s) abroad through approved location(s) in India. The approval for location(s) would be given by the Licensor (DOT) in consultation with the Ministry of Home Affairs. (xii) Under no circumstances, should any RA to the suppliers/manufacturers and affiliate(s) be enabled to access Lawful Interception System(LIS), Lawful Interception Monitoring(LIM), Call contents of the traffic and any such sensitive sector/data, which the licensor may notify from time to time. (xiii) The licensee company is not allowed to use remote access facility for monitoring of content. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....providers shall submit a compliance report on the aforesaid conditions to the licensor on 1st day of July and January on six monthly basis. 15.2 (a) ISP with gateways (b) ISP's not providing gateways i.e. without gate-ways (both for satellite 74% Automatic up to 49% Government route beyond 49% and up to 27 Sl.No. Sector/Activity and marine cables) Note: The new guidelines of August 24, 2007 Department of Telecommunications provide for new ISP licenses with FDI up to 74%. (c) Radio paging (d) End-to-End bandwidth 15.3 (a) Infrastructure % of Cap/Equity FDI Entry Route 74% provider 100% Automatic up to 49% 16 16.1 16.1.1 providing dark fibre, right of way, duct space, tower (IP Category I) (b)Electronic Mail (c) Voice Mail Note: Investment in all the above activities is subject to the conditions that such companies will divest 26% of their equity in favour of Indian public in 5 years, if these companies are listed in other parts of the world. TRADING (i) Cash & Carry Wholesale 100% Trading/ Wholesale Trading (including sourcing fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Note: An Entity, to whom WT is made, may fulfill any one of 29 Sl.No. Sector/Activity the 4 conditions. (c) 16.2 16.3 % of Cap/Equity FDI Entry Route (d) (e) (f) Full records indicating all the details of such sales like name of entity, kind of entity, registration/license/permit etc. number, amount of sale etc. should be maintained on a day to day basis. WT of goods would be permitted among companies of the same group. However, such WT to group companies taken together should not exceed 25% of the total turnover of the wholesale venture WT can be undertaken as per normal business practice, including extending credit facilities subject to applicable regulations. A Wholesale/Cash & carry trader cannot open retail shops to sell to the consumer directly. E-commerce activities 100% Automatic E-commerce activities refer to the activity of buying and selling by a company through the e-commerce platform. Such companies would engage only in Business to Business (B2B) e-commerce and not in retail trading, inter-alia implying that existing restrictions on FDI in domestic trading would be appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....IA) in the Department of Industrial Policy & Promotion. The application would specifically indicate the product/product categories which 31 Sl.No. 17 17.1 17.2 Sector/Activity % of FDI Entry Route Cap/Equity 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. (4) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the products proposed to be sold satisfy the notified guidelines, before being considered by the FIPB for Government approval. FINANCIAL SERVICES Foreign investment in other financial services, other than those indicated below, would require prior approval of the Government: Asset Reconstruction Companies 'Asset Reconstruction Company' 49% of paid-up Government capital of ARC (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). Other conditions: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....irectors followed by a special resolution to that effect by its General Body. 33 Sl.No. Sector/Activity % of FDI Entry Route Cap/Equity (a) Thus, the FII investment limit will continue to be within 49 per cent of the total paid-up capital. (b) In the case of NRIs, as hitherto, individual holding is restricted to 5 per cent of the total paid-up capital both on repatriation and non- repatriation basis and aggregate limit cannot exceed 10 per cent of the total paid-up capital both on repatriation and non-repatriation basis. However, NRI holding can be allowed up to 24 per cent of the total paid-up capital both on repatriation and non-repatriation basis provided the banking company passes a special resolution to that effect in the General Body. (c) Applications for foreign direct investment in private banks having joint venture/subsidiary in insurance sector may be addressed to the Reserve Bank of India (RBI) for consideration in consultation with the Insurance Regulatory and Development Authority (IRDA) in order to ensure that the 26 per cent limit of foreign shareholding applicable for the insurance sector is not be....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of banking companies, and this should be noted by potential investor. Any change in the ceiling can be brought about only after final policy decisions and appropriate Parliamentary approvals. Banking- Public Sector Banking- Public Sector subject to 20% (FDI and Government 35 Sl.No. Sector/Activity % of FDI Entry Route Cap/Equity Banking Companies (Acquisition & Portfolio Investment) Transfer of Undertakings) Acts 1970/80. This ceiling (20%) is also 20 20.1 applicable to the State Bank of India and its associate Banks. Commodity Exchanges 1 Futures trading in commodities are regulated under the Forward Contracts (Regulation) Act, 1952. Commodity Exchanges, like Stock Exchanges, are infrastructure companies in the commodity futures market. With a view to infuse globally acceptable best practices, modern management skills and latest technology, it was decided to allow foreign investment in Commodity Exchanges. 2 For the purposes of this chapter, (i) "Commodity Exchange" is a recognized association under the provisions of the Forward Contracts (Regulation) Act, 1952, as amended from time to ti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or indirectly hold more than 10% equity. 37 Sl.No. Sector/Activity 22 22.1 22.2 22.2.1 23 23.1 23.2 24 24.1 % of FDI Entry Route Cap/Equity (b) Any acquisition in excess of 1% will have to be reported to RBI as a mandatory requirement; and (c) FIIs investing in CICs shall not seek a representation on the Board of Directors based upon their shareholding. Infrastructure Company in the Securities Market Infrastructure companies in 49% (FDI & FII) Securities Markets, namely, stock exchanges, depositories and clearing corporations, in compliance with SEBI Regulations [FDI limit of 26 per cent and an FII limit of 23 per cent of the paid-up capital ] Government (For FDI) Other Conditions: FII can invest only through purchases in the secondary market Insurance Insurance Other Conditions: 26% Automatic (1) FDI in the Insurance sector, as prescribed in the Insurance Act, 1938, is allowed under the automatic route. (2) This will be subject to the condition that Companies bringing in FDI shall obtain necessary license from the Insurance Regulatory & Development Au....