TMI BlogReview of Foreign Direct Investment (FDI) policy on various sectorsX X X X Extracts X X X X X X X X Extracts X X X X ..... Para 6.2.5 of the FDI Policy is amended to read as under: Subject to the provisions of the FDI policy, foreign investment in `manufacturing' sector is under automatic route. Further, a manufacturer is permitted to sell its products manufactured in India through wholesale and/or retail, including through e-commerce without Government approval. 3. Para 3.2.5 of the FDI Policy is amended to read as under: FDI in LLPs is permitted, subject to the following conditions: (a) FDI is permitted under the automatic route in LLPs operating in sectors/activities where 100% FDI is allowed, through the automatic route and there are no FDI- linked performance conditions. (b) An Indian company or an LLP, having foreign investment, will be permitted to make downstream investment in another company or LLP in sectors in which 100% FDI is allowed under the automatic route and there are no FDI-linked performance conditions. (c) FDI in LLP is subject to the compliance of the conditions of LLP Act, 2008. 4. Para 2.1.7 of the FDI Policy is amended to read as under: 'Control' shall include the right to appoint a majority of the dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1. For the purposes of FDI policy, internal accruals will mean as profits transferred to reserve account after payment of taxes. 7. Para 3.10.3.3 of the FDI Policy is amended to read as under: For undertaking activities which are under automatic route and without FDI linked performance conditions, Indian company which does not have any operations and also does not have any downstream investments, will be permitted to have infusion of foreign investment under automatic route. However approval of the Government will be required for such companies for infusion of foreign investment for undertaking activities which are under Government route, regardless of the amount or extent of foreign investment. Further, as and when such a company commences business(s) or makes downstream investment, it will have to comply with the relevant sectoral conditions on entry route, conditionalities and caps. 8. Para 3.5.6 of the FDI Policy is amended to read as under: In cases of investment by way of swap of shares, irrespective of the amount, valuation of the shares will have to be made by a Merchant Banker registered with SEBI or an Investment Banker outside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments have been made under Schedule 1, 2, 2A, 3, 6 and 8 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations. (vi) Investment by NRIs under Schedule 4 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations will be deemed to be domestic investment at par with the investment made by residents. (vii) A company, trust and partnership firm incorporated outside India and owned and controlled by non-resident Indians will be eligible for investments under Schedule 4 of FEMA (Transfer or issue of Security by Persons Resident Outside India) Regulations and such investment will also be deemed domestic investment at par with the investment made by residents. 11. Para 5.2 of the FDI Policy is amended to read as under: 5.2.1 The Minister of Finance who is in-charge of FIPB would consider the recommendations of FIPB on proposals with total foreign equity inflow of and below ₹ 5000 crore. 5.2.2 The recommendations of FIPB on proposals with total foreign equity inflow of more than ₹ 5000 crore would be placed for consideration of Cabinet Committee on Economic Affairs (CCEA). 5.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antations (iv) Cardamom plantations (v) Palm oil tree plantations (vi) Olive oil tree plantations Note: Besides the above, FDI is not allowed in any other plantation sector/activity 100% Automatic 6.2.2.2 Other Condition Prior approval of the State Government concerned is required in case of any future land use change. 14. Para 6.2.3.3.2 of the FDI Policy is amended to read as under: (i) FDI for separation of titanium bearing minerals ores will be subject to the following conditions viz.: (A) value addition facilities are set up within India along with transfer of technology; (B) disposal of tailings during the mineral separation shall be carried out in accordance with regulations framed by the Atomic Energy Regulatory Board such as Atomic Energy (Radiation Protection) Rules, 2004 and the Atomic Energy (Safe Disposal of Radioactive Wastes) Rules, 1987. (ii) FDI will not be allowed in mining of prescribed substances listed in the Notification No. S.O. 61(E), dated 18.1.2006, issued by the Department of Atomic Energy. Clarification: (1)For titanium bearing ores such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 upgradation of networks towards digitalization and addressability); (4)Mobile TV; (5)Headend-in-the Sky Broadcasting Service(H ITS) 100% Automatic up to 49% Government route beyond 49% 6.2.7.1.2 Cable Networks (Other MSOs not undertaking upgradation of networks towards digitalization and addressability and Local Cable Operators (LCOs)) 100% Automatic up to 49% Government route beyond 49% Para 6.2.7.2 of the FDI Policy is amended to read as under: Sector/Activity Foreign Investment Cap Entry Route 6.2.7.2.1 49% Government Terrestrial Broadcasting FM (FM Radio), subject to such terms and conditions, as specified from time to time, by Ministry of Information Broadcasting, for grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Foreign Investment Cap Entry Route (1) (a) Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline (b) Regional Air Transport Service 49% FDI (100% for NRIs) Automatic (2)Non-Scheduled Air Transport Service 100% Automatic (3)Helicopter services/seaplane services requiring DGCA approval 100% Automatic There is no change in other conditions mentioned at 6.2.9.3.1 of the FDI Policy and Note thereto. 18. Para 6.2.9.4 of the FDI Policy is amended to read as under: Sector/Activity Foreign Investment Cap Entry Route (1)Ground Handling Services subject to sectoral regulations and security clearance 100% Automatic (2)Maintenance and Repair organizations; flying training institutes; and technical training institutions. 100% Automatic 19. Para 6.2.13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to exit and repatriate foreign investment before the completion of project under automatic route, provided that a lock-in-period of three years, calculated with reference to each tranche of foreign investment has been completed. Further, transfer of stake from one non-resident to another non- resident, without repatriation of investment will neither be subject to any lock-in period nor to any government approval. (B) The project shall conform to the norms and standards, including land use requirements and provision of community amenities and common facilities, as laid down in the applicable building control regulations, bye-laws, rules, and other regulations of the State Government/Municipal/Local Body concerned. (C) The Indian investee company will be permitted to sell only developed plots. For the purposes of this policy developed plots will mean plots where trunk infrastructure i.e. roads, water supply, street lighting, drainage and sewerage, have been made available. (D) The Indian investee company shall be responsible for obtaining all necessary approvals, including those of the building/layout plans, developing internal and peripheral areas and other inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Transfer of Property Act, 1882 (4 of 1882) ; or (e) any transaction, by acquiring shares in a company or by way of any agreement or any arrangement or in any other manner whatsoever, which has the effect of transferring, or enabling the enjoyment of, any immovable property. 22. Para 6.2.16.1.2 (f) of the FDI Policy is amended to read as under: A wholesale/cash carry trader can undertake single brand retail trading, subject to the conditions mentioned in para 6.2.16.3. An entity undertaking wholesale/cash and carry as well as retail business will be mandated to maintain separate books of accounts for these two arms of the business and duly audited by the statutory auditors. Conditions of the FDI policy for wholesale/cash and carry business and for retail business have to be separately complied with by the respective business arms. 23. Para 6.2.16.3 of the FDI Policy is amended to read as under: Sector/Activity Foreign Investment Cap Entry Route Single Brand Product Retail Trading 100% Automatic up to 49% Government route beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is the recipient of Foreign Investment for the purpose of carrying out single-brand product retail trading. (f) Subject to the conditions mentioned in this Para, a single brand retail trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce. (3) Application seeking permission of the Government for FDI exceeding 49% in a company which proposes to undertake single brand retail trading in India would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy Promotion. The applications would specifically indicate the product/product categories which 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. In case of FDI up to 49%, the list of products/product categories proposed to be sold except food products would be provided to the RBI. (4) Applications would be processed in the Department of Industrial Policy Promotion, to determine whether the proposed investment satisfies the notified guidelines, before being con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by its Board of Directors followed by a special resolution to that effect by its General Body. (a) 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 nonrepatriation basis provided the banking company passes a special resolution to that effect in the General Body. (b) 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 of India (IRDAI) in order to ensure that the 49 per cent limit of foreign shareholding applicable for the insurance sector is not being breached. (c) Transfer of shares under FDI from residents to non-residents will continue to require approval of RBI and Government as per para 3.6.2 above as applicable. (d) The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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