Government eases norms on FDI across board

The Government hiked foreign direct investment limits in a host of sectors and allowed 100% in telecom, asset reconstruction companies, and credit information companies. The widening current account deficit and the falling rupee have prompted the Government to look at ways to attract more foreign investments.

The Government has hiked FDI limits with 100% FDI in telecom, asset reconstruction companies and credit information companies while it retained the Defence sector cap at 26%. The level can be raised for proposals involving advanced technology only after it is approved by the Cabinet Committee on Security.

Further, automatic route in petroleum and natural gas, commodity bourses, and power exchanges have been allowed while retaining 49% cap.

In basic cellular services, the Government has raised the FDI cap from 74% to 100%. While 49% investment can be made through the automatic route, approval from the Foreign Investment Promotion Board is needed for higher stakes.

In single-brand retail sector, where 100% FDI is already allowed, 49% investment will be permitted through the automatic route while investments over that level have to be made via the FIPB.

The FDI decisions will be incorporated in a Cabinet note and placed before the Union Cabinet for approval at a meeting soon.

FDI caps update

Sector	Cap	Route
1. Petroleum and Natural Gas and Refining	49%	Automatic
2. Commodity Exchanges	49%	Automatic
3. Power Exchanges	49%	Automatic
4. Stock Exchanges, Depositories, Corporation	49%	Automatic
5. Asset Reconstruction companies	Upto 49% 49% to 100%	Automatic FIPB
6. Credit Information companies	74%	Automatic
7. Single Brand Retail trading	Upto 49% 49% to 100%	Automatic FIPB
8. Basic and Cellular Services, etc.	Upto 49% 49% to 100%	Automatic  FIPB
9. Courier Services	100%	Automatic
10. Defence Production		CCS may approve proposals on case to case basis beyond 26% which are likely to result in access to modern and state of the art technology in the country.

Warm regards,

Dr. S P Sharma