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Introduction of Composite Caps for Simplification of Foreign Direct Investment (FDI) policy to attract foreign investment

FEMA - Press Note No. 08 - Dated:- 30-7-2015 - Government of India Ministry of Commerce & Industry Department of Industrial Policy & Promotion (FC-I Section) Press Note No. 8 (2015 Series) Subject : The Government of India has reviewed the extant FDI policy on various sectors and made following amendments in the Consolidated FDI Policy Circular of 2015, effective from May 12, 2015, by introducing composite caps, so that uniformity and simplicity are brought in across the sectors in FDI p .....

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. FCCBs and DRs having underlying of instruments which can be issued under Schedule 5, being in the nature of debt, shall not be treated as foreign investment. However, any equity holding by a person resident outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned as foreign investment. 3. Para 4.1.2 of the Consolidated FDI Policy Circular of 2015, is amended to read as under: 4.1.2 For the purpose of computation of indirect foreign investment, fore .....

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bt, shall not be treated as foreign investment. However, any equity holding by a person resident outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned as foreign investment. 4. Para 3.1.4 (i) of the Consolidated FDI Policy Circular of 2015, is amended to read as under: 3.1.4 (i) An FII/FPI/QFI (Schedule 2, 2A and 8 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations, as the case may be) may invest in the capital o .....

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o prior intimation to RBI. The aggregate FII/FPI/QFI investment, individually or in conjunction with other kinds of foreign investment, will not exceed sectoral/statutory cap. 5. Para 6.2 of the Consolidated FDI Policy Circular of 2015 is amended to read as under: (a) In the sectors/activities as per Annexure, foreign investment up to the limit indicated against each sector/activity is allowed, subject to the conditions of the extant policy on specified sectors and applicable laws/regulations; s .....

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sue transfer of shares beyond the issue price of the share, cannot be taken into account while calculating minimum capitalization requirement. (b) Sectoral cap i.e. the maximum amount which can be invested by foreign investors in an entity, unless provided otherwise, is composite and includes all types of foreign investments, direct and indirect, regardless of whether the said investments have been made under Schedule 1 (FDI), 2 (FII), 2A (FPI), 3 (NRI), 6 (FVCI), 8 (QFI), 9 (LLPs) and 10 (DRs) .....

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ign investment in sectors under Government approval route resulting in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities will be subject to Government approval. Foreign investment in sectors under automatic route but with conditionalities, resulting in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities, will be subject to compliance of such conditionalities. (d) The sectors wh .....

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nt Indian citizens to non-resident entities. Other foreign investments will be subject to conditions of Government approval and compliance of sectoral conditions as laid down in the FDI policy. (f) Total foreign investment, direct and indirect, in an entity will not exceed the sectoral/statutory cap. (g) Any existing foreign investment already made in accordance with the policy in existence would not require any modification to conform to these amendments. (h) The onus of compliance of above pro .....

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c route. 8. In Banking- Private sector, where sectoral cap is 74%, FII/FPI/ QFI investment limits will continue to be within 49% of the total paid up capital of the company. 9. There is no change in the entry route i.e. Government approval requirement to bring foreign investment in a particular sector/ activity. Further, subject to the amendments mentioned in this Press Note, there is no change in other conditions mentioned in the Consolidated FDI Policy Circular of 2015 and subsequent Press Not .....

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ulture 6.2.1 Agriculture & Animal Husbandry (a) Floriculture, Horticulture, Apiculture and Cultivation of Vegetables & Mushrooms under controlled conditions; (b) Development and Production of seeds and planting material; (c) Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture, under controlled conditions; and (d) Services related to agro and allied sectors Note: Besides the above, FDI is not allowed in any other agricultural sector/activity 100% Automatic 6.2.2 Tea P .....

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Lignite mining for captive 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. 100% Automatic (2) Setting up coal processing plants 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 partie .....

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loration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products and natural gas, marketing of natural gas and petroleum products, petroleum product pipelines, natural gas/pipelines, LNG Regasification infrastructure, market study and formulation and Petroleum refining in the private sector, subject to the existing sectoral policy and regulatory framework in the oil marketing sector and the policy of the Government on private participation in explorati .....

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t route up to 49% Above 49% to Cabinet Committee on Security (CCS) on case to case basis, wherever it is likely to result in access to modern and 'state-of-art' technology in the country. Services Sector Information Services 6.2.7 Broadcasting 6.2.7.1 Broadcasting Carriage Services 6.2.7.1.1 (1) Teleports (setting up of up-linking HUBs/Teleports); (2) Direct to Home (DTH); (3) Cable Networks (Multi System operators (MSOs) operating at National or State or District level and undertaking u .....

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ed from time to time, by Ministry of Information & Broadcasting, for grant of permission for setting up of FM Radio stations 26% Government 6.2.7.2.2 Up-linking of 'News & Current Affairs' TV Channels 26% Government 6.2.7.2.3 Up-linking of Non-'News & Current Affairs' TV Channels/Down-linking of TV Channels 100% Government 6.2.8 Print Media 6.2.8.1 Publishing of newspaper and periodicals dealing with news and current affairs 26% Government 6.2.8.2 Publication of India .....

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100% Automatic (b) Existing projects 100% Automatic up to 74% Government route beyond 74% 6.2.9.3 Air Transport Services (1) Scheduled Air Transport Service/Domestic Scheduled Passenger Airline 49% (100% for NRIs) Automatic (2) Non-Scheduled Air Transport Service 74% (100% for NRIs) Automatic up to 49% Government route beyond 49% and upto 74% (3) Helicopter services/seaplane services requiring DGCA approval 100% Automatic 6.2.9.3.1 Foreign airlines in the capital of Indian companies, operating .....

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not come within the ambit of the Indian Post Office Act, 1898 and excluding the activity relating to the distribution of letters. 100% Automatic 6.2.11 Construction Development: Townships, Housing, Built-up infrastructure 6.2.11.1 Construction-development projects (which would include development of townships, construction of residential/commercial premises, roads or bridges, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure, to .....

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ces, 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 licenses, Voice Mail/Audiotex/UMS, Resale of IPLC, Mobile Number Portability Services, Infrastructure Provider Category-I (providing dark fibre, right of way, duct space, tower) except Other Service Providers. 100% Automatic up to 49% Government route beyond 49% 6.2.1 .....

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ight lines, (iv) Rolling stock including train sets, and locomotives/coaches manufacturing and maintenance facilities, (v) Railway Electrification, (vi) Signaling systems, (vii) Freight terminals, (viii) Passenger terminals, (ix) Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivities to main railway line and (x) Mass Rapid Transport Systems. 100% Automatic Financial Services 6.2.18 Financial Services Foreign investment in other .....

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g- Private Sector This 74% limit will include investment under the Portfolio Investment Scheme (PIS) by Flls/FPIs, NRIs and shares acquired prior to September 16, 2003 by erstwhile OCBs, and continue to include IPOs, Private placements, GDR/ADRs and acquisition of shares from existing shareholders. 74% (FII/FPI/QFI upto 49%) Automatic up to 49% Government route beyond 49% and upto 74% 6.2.18.3 Banking- Public Sector 6.2.18.3.1 Banking- Public Sector subject to Banking Companies (Acquisition & .....

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