The NDA Government has notified measures to ease and simplify the foreign
direct investment (FDI) rules in 15 sectors that were announced by the
Finance Minister, Arun Jaitley, a day before Diwali.
The decision to raise the threshold limit for approval by the Foreign
Investment Promotion Board (FIPB) to ₹ 5,000 crore from ₹ 3,000 crore
has also been notified by the Department of Industrial Policy &
Promotion (DIPP) on Tuesday.
The sectors, where rules have been eased, include defence, construction
development, broadcasting, civil aviation, agriculture, plantation,
limited liability partnerships, manufacturing, single-brand retail and
private sector banking.
In a boost to e-commerce, the new FDI rules now allow all manufacturers
in the country — with or without foreign investment — to sell their
product through wholesale and/or retail, including through e-commerce
without government approval.
In broadcasting content services, including FM radio and up-linking of
‘news & Government route current affairs’ TV channels, the FDI cap
now stands at 49 % from 24%
In addition to tea plantation, up to 100 % FDI is now allowed in
some other plantation sectors like coffee, rubber, cardamom, palm oil
tree and olive oil tree.
In the defence sector, foreign investment up to 49 per cent is now under
automatic route, instead of being routed through FIPB. Proposals over
49 % will be scrutinised by FIPB.
One of the conditions attached to the FDI in defence is that, infusion
of fresh foreign investment within the permitted automatic route level,
in a company not seeking industrial licence, resulting in change of the
ownership pattern, or transfer of ownership to a new foreign investor,
will require government approval.
In the area of single-brand retail, the government has clarified that
for ‘state-of-art’ and ‘cutting edge technology’, the 30% sourcing norms can be relaxed subject to government approval. The same
entity to carry will now be allowed to carry out both wholesale and
single-brand retail trading.
In the construction development sector, the requirement of minimum
capitalisation of $ 5 million within the period of six months of
commencement of business and conditions of area restriction has been
removed.
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