Revision in FDI Regulations

17-2-2009

Contents

Government has put in place a liberal and investor-friendly policy on Foreign Direct Investment (FDI) under which FDI up to 100% is permitted on the automatic route in most sectors / activities. The UNCTAD's World Investment Reports for 2007 and 2008 have rated India as the second most attractive investment destination.

The policy on FDI is reviewed on a continuing basis through inter-ministerial consultations. A statement giving the extant FDI policy on sensitive sectors viz., Defence, Aviation, Print Media and Telecom is as below:

1. Defence Production:

FDI up to 26%, under the FIPB route, is allowed for Defence Production subject to licensing under Industries (Development & Regulation) Act, 1951 and guidelines on FDI in production of arms & ammunition.

2. FDI Policy for Air Transport Services Sector:

Government has allowed the following:

No foreign airlines would be allowed to participate directly or indirectly in the equity of an Air Service Undertaking;

FDI up to 49% and investment by Non-resident Indians (NRI) up to 100% will be allowed on the automatic route in Domestic Scheduled Passenger Airline Sector;

FDI up to 74% and investment by Non-resident Indians (NRI) up to 100% will be allowed on the automatic route in Non Scheduled airlines, Chartered airlines, and Cargo airlines;

FDI up to 74% and investment by NRI up to 100% will be allowed on the automatic route in Ground Handling Services; and

FDI up to 100% will be allowed on the automatic route in Maintenance and Repair organizations; flying training institutes; technical training institutions; and helicopter services/seaplane services.

3. Telecommunications

	Sector	Equity Cap	Entry route	Other Conditions
a)	Basic and cellular, Unified Access Services, National/ International Long Distance, V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS) and other value added telecom services	74% (Including FDI, FII, NRI, FCCBs, ADRs, GDRs, convertible Preference shares, and proportion- nate foreign equity in Indian promoters/ Investing Company)	Automatic up to 49%. FIPB beyond 49%.	Subject to guidelines notified in the PN 3(2007)
b)	ISP with gateways, radio-paging, end-to-end bandwidth.	74%	Automatic up to 49%. FIPB beyond 49%.	Subject to licensing and security requirements notified by the Dept. of Telecommunications.
c)	(a) ISP without gateway, (b) infrastructure provider providing dark fibre, right of way, duct space, tower (Category I); (c) electronic mail and voice mail.	100%	Automatic up to 49%. FIPB beyond 49%.	Subject to the condition that such companies shall divest 26% of their equity in favour of Indian public in 5 years, if these companies are listed in other parts of the world. Also subject to licensing and security requirements, where required.
d)	Manufacture of telecom equipments	100%	Automatic	Subject to sectoral requirements.

4. Print Media

a.	Publishing of newspaper and periodicals dealing with news and current affairs	26%	FIPB	Subject to Guidelines notified by Ministry of Information & Broadcasting. www.mib.nic.in
b.	Publishing of scientific magazines/specialty journals/periodicals	100%	FIPB	Subject to guidelines issued by Ministry of Information & Broadcasting. www.mib.nic.in
c.	Publishing of facsimile edition of foreign newspapers.	100%	FIPB	Subject to guidelines issued by Ministry of Information & Broadcasting. Press Note 1 of 2009.
d.	Publication of Indian editions of foreign magazines dealing with news & current affairs.	26% (FDI & Investment by NRIs/PIOs/FII)	FIPB	Subject to guidelines issued by Ministry of Information & Broadcasting. Press Note 1 of 2009.