Relaxation of Conditions for FDI in Different Sectors

30-7-2014

Contents

Review of the FDI policy of the country is an ongoing process and Government has taken a number of steps in the recent past to make India an attractive investment destination.

As regards proposal to allow Foreign Direct Investment (FDI) in different sectors, Finance Minister, in his Budget Speech, given on 10.7.2014, has made following statement:

“The policy of the NDA Government is to promote Foreign Direct Investment (FDI) selectively in sectors where it helps the larger interest of the Indian Economy. FDI in several sectors is an additionality of resource which helps in promoting domestic manufacture and job creation. India today needs a boost for job creation. Our manufacturing sector in particular needs a push for job creation.

India today is the largest buyer of defence equipment in the world. Our domestic manufacturing capacities are still at a nascent stage. We are buying substantial part of our Defence requirements directly from foreign players. Companies controlled by foreign governments and foreign private sector are supplying our Defence requirements to us at a considerable outflow of foreign exchange. Currently we permit 26 per cent FDI in Defence manufacturing. The composite cap of foreign exchange is being raised to 49 per cent with full Indian management and control through the FIPB route.

The Insurance sector is investment starved. Several segments of the Insurance sector need an expansion. The composite cap in the Insurance sector is proposed to be increased up to 49 per cent from the current level of 26 per cent, with full Indian management and control, through the FIPB route.

To encourage development of Smart Cities, which will also provide habitation for the neo-middle class, requirement of the built up area and capital conditions for FDI is being reduced from 50,000 square metres to 20,000 square metres and from USD 10 million to USD 5 million respectively with a three year post completion lock in.

To further encourage this, projects which commit at least 30 per cent of the total project cost for low cost affordable housing will be exempted from minimum built up area and capitalisation requirements, with the condition of three year lock-in. FDI in the manufacturing sector is today on the automatic route. The manufacturing units will be allowed to sell its products through retail including E-commerce platforms without any additional approval.”

The total FDI Inflows from April 2011 to May 2014 is as under:

Sl No	Financial Year (Apr-Mar)	FDI equity inflows (US$ million)	Total FDI inflows (US$ million)*
1	2011-12	35,121	46,556
2	2012-13	22,423	34,298
3	2013-14	24,299	36,396
4	2014-15 (Apr-May)	5,309	8,011
Grand Total		87,152	125,261

* Includes equity inflows, Equity capital of unincorporated bodies, Re-invested Earnings and other capital.

A statement on the sector-wise FDI equity inflows from April 2011 to May 2014 is at Annexure -1.

ANNEXURE-I

STATEMENT REFERRED TO IN REPLY TO PART (d) OF THE RAJYA SABHA UNSTARRED QUESTION NO. 2178 FOR ANSWER ON 30th JULY, 2014 REGARDING RELAXATION OF CONDITIONS FOR FDI IN DIFFERENT SECTORS

SECTOR-WISE FDI EQUITY INFLOWS
FROM APRIL 2011 TO MAY 2014

(Amount in million)

*S.No*	*Sector*	*Amount of FDI Inflows*	*%age of Total Inflows*
		*(In US$)*
1	*SERVICES SECTOR (Fin.,Banking,Insurance,Non Fin/Business,Outsourcing,R&D,Courier,Tech. Testing and Analysis, Other)*	*12,848.25*	*14.74*
2	*DRUGS & PHARMACEUTICALS*	*6,314.70*	*7.25*
3	*CONSTRUCTION DEVELOPMENT: Townships, housing, built-up infrastructure and construction-development projects*	*5,920.15*	*6.79*
4	*CHEMICALS (OTHER THAN FERTILIZERS)*	*5,213.64*	*5.98*
5	*TELECOMMUNICATIONS*	*5,119.67*	*5.87*
6	*HOTEL & TOURISM*	*4,968.75*	*5.70*
7	*FOOD PROCESSING INDUSTRIES*	*4,654.07*	*5.34*
8	*AUTOMOBILE INDUSTRY*	*4,050.62*	*4.65*
9	*METALLURGICAL INDUSTRIES*	*3,935.05*	*4.52*
10	*POWER*	*3,400.87*	*3.90*
11	*TRADING*	*3,023.87*	*3.47*
12	*COMPUTER SOFTWARE & HARDWARE*	*2,520.47*	*2.89*
13	*PETROLEUM & NATURAL GAS*	*2,357.01*	*2.70*
14	*NON-CONVENTIONAL ENERGY*	*2,154.87*	*2.47*
15	*INDUSTRIAL MACHINERY*	*1,726.06*	*1.98*
16	*MISCELLANEOUS MECHANICAL & ENGINEERING INDUSTRIES*	*1,678.63*	*1.93*
17	*MISCELLANEOUS INDUSTRIES*	*1,542.39*	*1.77*
18	*INFORMATION & BROADCASTING (INCLUDING PRINT MEDIA)*	*1,522.39*	*1.75*
19	*HOSPITAL & DIAGNOSTIC CENTRES*	*1,371.36*	*1.57*
20	*RUBBER GOODS*	*1,206.46*	*1.38*
21	*CONSTRUCTION (INFRASTRUCTURE) ACTIVITIES*	*1,192.23*	*1.37*
22	*FERMENTATION INDUSTRIES*	*993.59*	*1.14*
23	*ELECTRICAL EQUIPMENTS*	*965.39*	*1.11*
24	*CONSULTANCY SERVICES*	*947.11*	*1.09*
25	*PRIME MOVER (OTHER THAN ELECTRICAL GENERATORS)*	*715.71*	*0.82*
26	*CEMENT AND GYPSUM PRODUCTS*	*563.01*	*0.65*
27	*SOAPS, COSMETICS & TOILET PREPARATIONS*	*554.65*	*0.64*
28	*EDUCATION*	*547.25*	*0.63*
29	*TEXTILES (INCLUDING DYED,PRINTED)*	*478.65*	*0.55*
30	*MEDICAL AND SURGICAL APPLIANCES*	*459.60*	*0.53*
31	*PAPER AND PULP (INCLUDING PAPER PRODUCTS)*	*442.12*	*0.51*
32	*ELECTRONICS*	*381.90*	*0.44*
33	*RAILWAY RELATED COMPONENTS*	*360.68*	*0.41*
34	*AGRICULTURE SERVICES*	*311.33*	*0.36*
35	*MACHINE TOOLS*	*295.82*	*0.34*
36	*GLASS*	*285.57*	*0.33*
37	*SEA TRANSPORT*	*242.70*	*0.28*
38	*MINING*	*221.22*	*0.25*
39	*VEGETABLE OILS AND VANASPATI*	*195.63*	*0.22*
40	*PRINTING OF BOOKS (INCLUDING LITHO PRINTING INDUSTRY)*	*176.87*	*0.20*
41	*CERAMICS*	*172.58*	*0.20*
42	*AGRICULTURAL MACHINERY*	*164.01*	*0.19*
43	*DIAMOND,GOLD ORNAMENTS*	*137.95*	*0.16*
44	*SCIENTIFIC INSTRUMENTS*	*125.43*	*0.14*
45	*RETAIL TRADING (SINGLE BRAND)*	*117.17*	*0.13*
46	*AIR TRANSPORT (INCLUDING AIR FREIGHT)*	*97.63*	*0.11*
47	*FERTILIZERS*	*95.80*	*0.11*
48	*COMMERCIAL, OFFICE & HOUSEHOLD EQUIPMENTS*	*81.80*	*0.09*
49	*TIMBER PRODUCTS*	*64.94*	*0.07*
50	*LEATHER,LEATHER GOODS AND PICKERS*	*64.42*	*0.07*
51	*EARTH-MOVING MACHINERY*	*56.61*	*0.06*
52	*BOILERS AND STEAM GENERATING PLANTS*	*53.35*	*0.06*
53	*SUGAR*	*20.45*	*0.02*
54	*TEA AND COFFEE (PROCESSING & WAREHOUSING COFFEE & RUBBER)*	*11.47*	*0.01*
55	*GLUE AND GELATIN*	*6.81*	*0.01*
56	*MATHEMATICAL,SURVEYING AND DRAWING INSTRUMENTS*	*6.71*	*0.01*
57	*INDUSTRIAL INSTRUMENTS*	*5.11*	*0.01*
58	*DEFENCE INDUSTRIES*	*4.89*	*0.01*
59	*COAL PRODUCTION*	*2.96*	*0.00*
60	*COIR*	*1.24*	*0.00*
61	*DYE-STUFFS*	*0.58*	*0.00*
62	*PORTS*	*0.32*	*0.00*
63	*PHOTOGRAPHIC RAW FILM AND PAPER*	*0.00*	*0.00*
	*Grand Total*	*87,152.46*

Note: Amount includes the Inflows received through SIA/FIPB route, acquisition of existing shares and RBI`s automatic route only.

The information was given by the Minister of State (Independent Charge) in the Ministry of Commerce & Industry Smt. Nirmala Sitharaman in a written reply in Rajya Sabha today.

← Previous Next →