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Review of Foreign Direct Investment (FDI) policy on various sectors

FEMA - Press Note No. 5(2016 Series) - Dated:- 24-6-2016 - Government of India Ministry of Commerce & Industry Department of Industrial Policy & Promotion (FC-I Section) Press Note No. 05 (2016 Series) Dated: June 24, 2016 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 2016 issued on June 07, 2016 (FDI Policy). 2. After para 3.7.1 of the FDI Policy, following new para 3.7.2 is .....

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DI Cap Entry Route a) Floriculture, Horticulture, 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, Apiculture; 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 (ii) Para 5.2.1.1 of the FDI Policy is amended to read as under: The ter .....

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acilities where micro-climatic conditions are regulated anthropogenically. 4. Para 5.2.5 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. Notwithstanding the FDI policy provisions on trading sector, 100% FDI .....

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e under the Industries (Development & Regulation) Act, 1951; and Manufacturing of small arms and ammunition under the Arms Act, 1959 100% Automatic up to 49% Government route beyond 49% wherever it is likely to result in access to modern technology or for other reasons to be recorded 5.2.6.2 Other Conditions (i) Infusion of fresh foreign investment within the permitted automatic route level, in a company not seeking industrial license, resulting in change in the ownership pattern or transfer .....

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s of product design and development. The investee/joint venture company along with manufacturing facility, should also have maintenance and life cycle support facility of the product being manufactured in India. 6. Para 5.2.7 .1 of the FDI Policy is amended to read as under: Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.7.1.1 (i)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 Dis .....

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p pattern or transfer of stake by existing investor to new foreign investor, will require Government approval 7. Para 5.2.9 of the FDI Policy is amended to read as under: 5.2.9 Civil Aviation 5.2.9.1 Airports Sector/Activity % of Equity/ FDI Cap Entry Route (a) Greenfield projects 100% Automatic (b) Existing projects 100% Automatic 5.2.9.2Air Transport Services Sector/Activity % of Equity/FDI Cap Entry Route (1) (a) Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline (b) Region .....

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o 49% Government route beyond 49% and up to 74% 5.2.13.1 Other Conditions (1) FDI in Private Security Agencies is subject to compliance with Private Security Agencies (Regulation) (PSAR) Act, 2005, as amended from time to time. (2) For the purposes of FDI policy on the sector, terms "Private Security Agencies", "Private Security" and "Armoured Car Service" will have the same meaning as provided under PSAR Act, 2005, which is reproduced as under: "Private Securi .....

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or both and includes provision of armoured car service; "Armoured Car Service" means the service provided by deployment of armed guards along with armoured car and such other related services which may be notified by the Central Government or as the case may be, the State Government from time to time. 9. Para 5.2. 15.3 of the FDI Policy is amended to read as under: Sector/Activity % of Equity/ FDI Cap Entry Route Single Brand Retail Trading 100% Automatic up to 49% Government route be .....

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a 'Single Brand' only. (b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India. (c) 'Single Brand' product-retail trading would cover only products which are branded during manufacturing. (d) A non-resident entity or entities, whether owner of the brand or otherwise, shall be permitted to undertake 'single brand' product retail trading in the country for the specific bran .....

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ite evidence should be filed with the RBI for the automatic route and SIA/FIPB for cases involving approval. (e) In respect of proposals involving foreign investment beyond 51%, sourcing of 30% of the value of goods purchased, will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. The quantum of domestic sourcing will be self-certified by the company, to be subsequently checked, by statutory auditors, from the duly certified accoun .....

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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) .....

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ssed in the Department of Industrial Policy & Promotion, to determine whether the proposed investment satisfies the notified guidelines, before being considered by the FIPB for Government approval. Note: (i) Conditions mentioned at Para 5.2.15.3 (2) (b) & 5.2.15.3 (2) (d) will not be applicable for undertaking SBRT of Indian brands. (ii) An Indian manufacturer is permitted to sell its own branded products in any manner i.e. wholesale, retail, including through e-commerce platforms. (iii) .....

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he first store for entities undertaking single brand retail trading of products having 'state-of-art' and 'cutting-edge' technology and where local sourcing is not possible. Thereafter, provisions of Para 5.2.15.3 (2) (e) will be applicable. 10. Para 5.2.27 of the FDI Policy is amended to read as under: Pharmaceuticals Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.27.1 Greenfield 100% Automatic 5.2.27.2 Brownfield 100% Automatic up to 74% Government route beyond 74% 5.2.27 .....

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in brownfield Pharmaceuticals, under both automatic and government approval routes, is further subject to compliance of following conditions: (a) The production level of National List of Essential Medicines (NLEM) drugs and/or consumables and their supply to the domestic market at the time of induction of FDI, being maintained over the next five years at an absolute quantitative level. The benchmark for this level would be decided with reference to the level of production of NLEM drugs and/or co .....

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ceding the year of induction of FDI (c) The administrative Ministry will be provided complete information pertaining to the transfer of technology, if any, along with induction of foreign investment into the investee company. Note: i. FDI up to 100%, under the automatic route is permitted for manufacturing of medical devices. The above mentioned conditions will, therefore, not be applicable to greenfield as well as brownfield projects of this industry. ii. Medical device means- a. any instrument .....

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