NDA Govt further opens up FDI in defence, civil aviation, food processing Monday June 20,2016

 

In the second tranche of reforms in the country's Foreign Direct Investment (FDI) policy, the BJP government has announced further opening up of a number of sectors, including defence, food processing, civil aviation, broadcast and pharmaceuticals.

The decision was taken at a meeting chaired by Prime Minister Narendra Modi on Monday June 20,2016  

In single-brand retail, however, the government has tightened the relaxation allowed on domestic sourcing to companies with "cutting edge" technology. 

In defence, 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, according to an official release. 

In the pharmaceutical sector, the government has decided to permit up to 74% FDI under automatic route in brownfield (existing) pharmaceuticals as opposed to the government approval route at present. For FDI beyond 74 % in brownfield pharma, the government approval route will continue. 

For greenfield (new) projects, 100 % FDI through automatic route is already allowed.

In case of civil aviation, the Centre will allow 100% FDI under automatic route in brownfield airport projects as opposed to 74 % at present. 

In food processing, it has 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. 

In single brand retail, instead of giving a blanket exemption to companies trading products with cutting edge technology from compulsory domestic sourcing of 30 % inputs, the Centre has introduced some limits. 

"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," the release said.

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