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Sl. No.
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Sector
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Guidelines
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1
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Airports
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Up to 100%, with FDI beyond 74% requiring Government approval
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2
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Atomic minerals
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The following three activities
are permitted to receive FDI/NRI investments through FIPB (as per detailed
guidelines issued by Department of Atomic Energy vide Resolution
No.8/1(1)/97-PSU/1422 dated 6.10.98):
· Mining and mineral
separation
· Value addition per se to
the products of (a) above
· Integrated activities
[comprising of both (a) and (b) above.] The following FDI participation is
permitted:
Up to 74% in both pure value addition and integrated projects
For pure value addition projects as well as integrated projects with
value addition upto any intermediate stage, FDI is permitted upto 74%
through joint venture companies with Central/State PSUs in which equity
holding of at least one PSU is not less than 26%
In exceptional cases, FDI beyond 74% will be permitted subject to
clearance of the Atomic Energy Commission before FIPB approval
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3
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Agriculture
(including plantation)
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No FDI/NRI Investment is permitted other than Tea sector. FDI,
permitted up to 100% in Tea sector, including tea plantations, with prior
Government approval and subject to following conditions:
Compulsory divestment of 26% equity in favour of Indian
partner/Indian public within a period of five years, and
Prior State government approval required in case of any future land
use change.
The above dispensation would be applicable to all fresh investments
(FDI) made in this sector.
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4
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Advertising and
films
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Advertising sector: FDI up to 100% allowed on the automatic route
Film sector (film production, exhibition and distribution including
related services/products) FDI up to 100% allowed on the automatic route
with no entry level condition
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5
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Broadcasting
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Broadcasting TV Software Production 100% foreign investment allowed
subject to: all future laws on broadcasting and no claim of any privilege
or protection by virtue of approval accorded, and not undertaking any
broadcasting from Indian soilwithout Government approval Setting up
hardware facilities, such as uplinking, HUB, etc. Private companies
incorporated in India with permissible FII/ NRI/PIO equity within the
limits (as in the case of telecom sector FDI limit up to 49% inclusive of
both FDI and portfolio investment) to set up uplinking hub (teleports) for
leasing or hiring out their facilities to broadcasters
Foot note:- As regards satellite broadcasting, all TV channels
irrespective of management control to uplink from India provided they
undertake to comply with the broadcast (programme & advertising)
code Cable Network Foreign
investment allowed up to 49% (inclusive of both FDI and portfolio
investment) of paid up share capital. Companies with minimum 51% of paid up
share capital held by Indian citizens are eligible under the Cable
Television Network Rules (1994) to provide cable TV services Direct-to-Home
Company with a maximum of foreign equity including FDI/NRI/FII of 49% would
be eligible to obtain DTH License. Within the foreign equity, the FDI
component not to exceed 20% Terrestrial Broadcasting FM. The licensee shall
be a company registered in India under the Companies Act. Indians should
hold all share holding except for the limited portfolio investment by
FII/NRI/PIO/OCB subject to such ceiling as might be decided from time to
time. Company shall have no direct investment by foreign entities, NRIs and
OCBs. As of now, the foreign investment is permissible to the extent of 20%
portfolio investment Terrestrial TV No private operator is allowed in
terrestrial TV transmission
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6
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Coal &
Lignite
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Private Indian companies setting up or operating power projects as
well as coal or lignite mines for captive consumption are allowed FDI up to
100% 100% FDI is allowed for setting up coal processing plants 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 parties who are
supplying raw coal to coal processing plants for washing or sizing iii. FDI
up to 74% is allowed for exploration or mining of coal or lignite for
captive consumption. In all the above cases, FDI is allowed up to 50% under
the automatic route subject to the condition that such investment shall not
exceed 49% of the equity of a PSU
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7
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Domestic Airlines
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(Detailed guidelines have been issued by Ministry of Civil Aviation)
In the domestic Airlines FDI up to 40% permitted subject to no direct or
indirect equity participation by foreign airlines 100% investment by NRIs.
The automatic route is not available
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8
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Defense &
Strategic Industries
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Foreign Direct Investment, including NRI investment, is permitted up
to 26% with prior Government approval subject to licensing and security
requirements. Detailed guidelines for participation of private
sector and foreign investors in this sector are given in Appendix-IV.
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9
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Drugs &
Pharmaceuticals
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FDI up to 100% is permitted on the automatic route for manufacture of
drugs and pharmaceutical, provided the activity does not attract compulsory
licensing or involve use of recombinant DNA technology, and specific cell /
tissue targeted formulations.
FDI proposals for the manufacture of licensable drugs and pharmaceuticals
and bulk drugs produced by recombinant DNA technology, and specific cell /
tissue targeted formulations will require prior Government approval
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10
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Establishment
& Operation of Satellite
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FDI up to 74% is permitted with prior Government approval
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11
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Hotels &
Tourism
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100% FDI is permissible in the sector on the automatic route The
term hotels include restaurants, beach resorts, and other tourist complexes
providing accommodation and/or catering and food facilities to tourists. Tourism
related industry include travel agencies, tour operating agencies and
tourist transport operating agencies, units providing facilities for
cultural, adventure and wild life experience to tourists, surface, air and
water transport facilities to tourists, leisure, entertainment, amusement,
sports, and health units for tourists and Convention/Seminar units and
organisations For foreign technology agreements, automatic approval is
granted if
up to 3% of the capital cost of the project is proposed to be paid
for technical and consultancy services including fees for architects,
design, supervision, etc. up to 3% of net turnover is payable for
franchising and marketing/publicity support fee, and up to 10% of gross
operating profit is payable for management fee, including incentive
fee
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12
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Housing &
Real Estate
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No foreign investment is permitted in this sector except for
development of integrated townships and settlements where FDI up to 100% is
permitted with prior Government approval. NRIs are allowed to invest in the
following activities. Development of serviced plots and construction of
built up residential premises. Investment in real estate covering
construction of residential and commercial premises including business
centres and offices Development of townships. City and regional level urban
infrastructure facilities, including both roads and bridges. Investment in
manufacture of building materials, which is also open to FDI Investment in
participatory ventures in (a) to (e) above Investment in housing finance
institutions, which is also open to FDI as an NBFC
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13
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Investing
Companies in Infrastructure /Service Sector
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In respect of the companies in infrastructure/service sector, where
there is a prescribed cap for foreign investment, only the direct
investment will be considered for the prescribed cap and foreign investment
in an investing company will not be set off against this cap provided the
foreign direct investment in such investing company does not exceed 49% and
the management of the investing company is with the Indian owners. The
automatic route is not available
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14
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Insurance
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FDI up to 26% in the Insurance sector is allowed on the automatic
route subject to obtaining licence from Insurance Regulatory & Development
Authority (IRDA)
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15
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Lottery Business,
Gambling & Betting
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Government has reiterated prohibition of foreign direct investment
(FDI) gambling & betting / Foreign technical collaboration (FTC) in any
form in lottery business, gambling and betting sector.
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16
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Mass Rapid Metro
Transit System
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FDI up to 100% is permitted on the automatic route in mass rapid
transport system in all metros including associated real estate
development
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17
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Mining
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For exploration and mining of diamonds and precious stones FDI is
allowed up to 74% under automatic route. For exploration and mining of gold
and silver and minerals other than diamonds and precious stones, metallurgy
and processing FDI is allowed up to 100% under automatic route
Press Note No. 18 (1998 series) dated 14.12.98 would not be
applicable for setting up 100% owned subsidiaries in so far as the mining
sector is concerned, subject to a declaration from the applicant that he
has no existing joint venture for the same area and / or the particular
mineral
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18
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Non Banking
Financial Companies
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FDI/NRI investments allowed in the following 19 NBFC activities
shall be as per levels indicated below:
Merchant banking
Underwriting Portfolio
Management Services
Investment Advisory Services
Financial Consultancy
Stock Broking
Asset Management
Venture Capital
Custodial Services
Factoring
Credit Reference Agencies
Credit rating Agencies
Leasing & Finance
Housing Finance
Forex Broking
Credit card business
Money changing Business
Micro Credit
Rural Credit
Minimum Capitalisation Norms for fund based NBFCs:
For FDI up to 51% - US$ 0.5 million to be brought upfront
For FDI above 51% and up to 75% - US $ 5 million to be brought
upfront For FDI above 75% and up to 100% - US $ 50 million out of which US
$ 7.5 million to be brought upfront and the balance in 24 months Minimum
capitalisation norms for non-fund based activities: Minimum capitalisation
norm of US $ 0.5 million is applicable in respect of all permitted non-
fund based NBFCs with foreign investment Foreign investors can set up 100%
operating subsidiaries without the condition to disinvest a minimum of 25%
of its equity to Indian entities, subject to bringing in US$ 50 million as
at (b) (iii) above (without any restriction on number of operating
subsidiaries without bringing in additional capital). Joint Venture
operating NBFC’s that have 75% or less than 75% foreign investment will
also be allowed to set up subsidiaries for undertaking other NBFC
activities, subject to the subsidiaries also complying with the applicable
minimum capital inflow i.e. (b)(i) and (b)(ii) above
FDI in the NBFC sector is put on automatic route subject to
compliance with guidelines of the Reserve Bank of India. RBI would issue
appropriate guidelines in this regard
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19
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Petroleum (other
than refining)
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Petroleum (Refining)
Under the exploration policy, FDI up to 100% is allowed in both small
and medium sized fields on the automatic route through (Other than
Refining) competitive bidding; up to 60% for unincorporated JV; and up to
51% for incorporated JV with a No Objection Certificate for medium size
fields
For petroleum products pipeline , FDI is permitted up to 100% under
automatic routec. FDI is permitted up to 100% on automatic route in
petroleum products marketing FDI upto 100% is permitted for Natural Gas/LNG
Pipelines with prior Government approval
100% wholly owned subsidiary(WOS) is permitted for the purpose of
market study and formulation
100% wholly owned subsidiary (WOS) is permitted for
investment/Financing For actual trading and marketing, minimum 26% Indian
equity is required over 5 years FDI is permitted up to 26% in case of
public sector units (PSUs). PSUs will hold 26% (Refining) and balance 48%
by public. Automatic route is not available In case of private Indian
companies, FDI is permitted up to 100% under automatic route
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20
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Pollution Control
and Management
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FDI up to 100% in both manufacture of pollution control equipment
and consultancy for integration of pollution control systems is permitted
on the automatic route
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21
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Postal Services
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FDI up to 100% is permitted in courier services with prior Government
approval excluding distribution of letters, which is reserved exclusively
for the state
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22
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Power
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Up to 100% FDI allowed in respect of projects relating to
electricity generation, transmission and distribution, other than atomic
reactor power plants. There is no limit on the project cost and quantum of
foreign direct investment
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23
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Print Media
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The following FDI participation in Indian entities publishing News
Papers and periodicals is permitted:
FDI up to 100% in publishing/printing scientific & technical
magazines, periodicals & journals FDI up to 26% in publishing News
Papers and Periodicals dealing in News and Current Affairs subject to
verification of antecedents of foreign investor, keeping editorial and
management control in the hands of resident Indians and ensuring against
dispersal of Indian equity. The detailed guidelines had been issued by
Ministry of Information and Broadcasting
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24
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Private Sector
Banking
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74% from all sources on the automatic route subject to guidelines
issued from RBI from time to time. Consolidated guidelines are given at
Appendix-III
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25
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Roads and
Highways, Ports and Harbours
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FDI up to 100% under automatic route is permitted in projects for construction
and maintenance of roads, highways, vehicular bridges, toll roads,
vehicular tunnels, ports and harbours
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26
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Telecommunication
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In basic, cellular, value added services and global mobile personal
communications by satellite, FDI is limited to 49% subject to licensing and
security requirements and adherence by the companies (who are investing and
the companies in which the investment is being made) to the licence
conditions for foreign equity cap and lock- in period for transfer and addition
of equity and other licence provisions
In ISPs with gateways, radio-paging and end-to-end bandwidth, FDI is
permitted up to 74% with FDI, beyond 49% requiring Government approval.
These services would be subject to licensing and security requirements No
equity cap is applicable to manufacturing activities FDI up to 100% is
allowed for the following activities in thetelecom sector :
ISPs not providing gateways (both for satellite and submarine
cables) Infrastructure Providers providing dark fibre (IP Category I)
Electronic Mail; and Voice Mail
The above would be subject to the following conditions: FDI up to
100% is allowed subject to the condition that such companies would divest
26% of their equity in favour of Indian public in 5 years, if these companies
are listed in other parts of the world
The above services would be subject to licensing and security
requirements, wherever required
Proposals for FDI beyond 49% shall be considered by FIPB on case to
case basis
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27
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Trading
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Trading is permitted under automatic route with FDI up to 51%
provided it is primarily export activities, and the undertaking is an
export house/ trading house/super trading house/star trading house.
However, under the FIPB route:- 100% FDI is permitted in case of trading
companies for the following activities:
exports
bulk imports with ex-port/ex-bonded warehouse sales cash and carry
wholesale trading
other import of goods or services provided at least 75% is for
procurement and sale of goods and services among the companies of the same
group and not for third party use or onward transfer/distribution/sales
ii. The following kinds of trading are also permitted, subject to
provisions of Foreign Trade Policy:
Companies for providing after sales services (that is not trading
per se)
Domestic trading of products of JVs is permitted at the wholesale
level for such trading companies who wish to market manufactured products
on behalf of their joint ventures in which they have equity participation
in India
Trading of hi-tech items/items requiring specialised after sales
service .
Trading of items for social sector
Trading of hi-tech, medical and diagnostic items
Trading of items sourced from the small scale sector under which,
based on technology provided and laid down quality specifications, a
company can market that item under its brand name
Domestic Sourcing of Products for Exports
Test marketing of such items for which a company has approval for
manufacture provided such test marketing facility will be for a period of
two years, and investment in setting up manufacturing facilities commences
simultaneously with test marketing
FDI up to 100% permitted for e-commerce activities subject to the
condition that such companies would divest 26% of their equity in favour of
the Indian public in five years, if these companies are listed in other
parts of the world. Such companies would engage only in business to
business (B2B) e-commerce and not in retail trading FDI is not permitted in
retail trading activity.
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28
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Township
Development
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FDI up to 100% is permitted for development of integrated townships
including houses, commercial premises, hotels, resorts, city and regional
level urban infrastructure facilities such as roads and bridges, mass rapid
transit system; and manufacture of building materials. Development of land
and providing allied infrastructure will form an integral part of
township’s development. FDI in this sector would be permissible with prior
Government approval. Detailed guidelines regarding investment in
this sector are given at Appendix-V
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29
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Venture Capital
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Offshore Venture Capital Funds/Companies are allowed to invest in
domestic Venture Capital Fund (VCF) and undertaking as well as other companies
through the automatic route, subject only to SEBI Company (VCC) regulations
and sector Venture Capital specific caps on FDI
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