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TMI BlogPermitted sectors, entry routes and sectoral caps for total foreign investmentX X X X Extracts X X X X X X X X Extracts X X X X ..... itions as the case may be, if such investment does not result in transfer of ownership and control of the resident Indian company from resident Indian citizens or transfer of ownership or control to persons resident outside India. Other investments by a person resident outside India will be subject to conditions of Government approval and compliance of sectoral conditions as laid down in these regulations. B. Sectoral Caps SECTOR-SPECIFIC POLICY FOR TOTAL FOREIGN INVESTMENT (1) Sectoral cap for the following sectors/ activities is the limit indicated against each sector. The total foreign investment shall not exceed the sectoral/ statutory cap. (2) Foreign investment in the following sectors/ activities is, subject to applicable laws/ regulations, security and other conditionalities (3) In sectors/ activities not listed below or not prohibited under regulation 15 of these Regulations, foreign investment is permitted up to 100 percent on the automatic route, subject to applicable laws/ regulations, security and other conditionalities. Provided foreign investment in financial services other than those indicated under serial number "F" below would require prior Government approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, foreign investment is not allowed in any other agricultural sector/ activity. 100% Automatic 1.2 Other Conditions The term 'under controlled conditions' covers the following: 'Cultivation under controlled conditions' for the categories of Floriculture, Horticulture, Cultivation of vegetables and Mushrooms is the practice of cultivation wherein rainfall, temperature, solar radiation, air humidity and culture medium are controlled artificially. Control in these parameters may be effected through protected cultivation under green houses, net houses, poly houses or any other improved infrastructure facilities where micro-climatic conditions are regulated anthropogenically. 2. Plantation 2.1 (a) Tea sector including tea plantations (b) Coffee plantations (c) Rubber plantations (d) Cardamom plantations (e) Palm oil tree plantations (f) Olive oil tree plantation Note: Foreign investment is not allowed in any plantation sector/ activity other than those listed above. 100% Automatic 2.2 Other Conditions Prior approval of the State Government concerned is required in case of any future land use change. 3. Mining 3.1 Mining and Exploration of metal and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries within the country. Thus, if with the technology transfer, the objective of this regulation can be achieved, the conditions prescribed at (a)(i) above shall be deemed to be fulfilled. 4. Petroleum & Natural Gas 4.1 Exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products and natural gas, marketing of natural gas and petroleum products, petroleum product pipelines, natural gas/ pipelines, LNG Regasification infrastructure, market study and formulation and Petroleum refining in the private sector, subject to the existing sectoral policy and regulatory framework in the oil marketing sector and the policy of the Government on private participation in exploration of oil and the discovered fields of national oil companies. 100% Automatic 4.2 Petroleum refining by the Public Sector Undertakings (PSUs), without any disinvestment or dilution of domestic equity in the existing PSUs. 49% Automatic 5. Manufacturing 100% Automatic 5.1 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond 49 percent in a company not seeking license/ permission from sectoral Ministry, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require Government approval 7.2 Broadcasting Content Services 7.2.1 Terrestrial Broadcasting FM (FM Radio), subject to such terms and conditions, as specified from time to time, by Ministry of Information and Broadcasting, for grant of permission for setting up of FM Radio stations. 49% Government 7.2.2 Up-Linking of 'News & Current Affairs' TV Channels 49% Government 7.2.3 Up-linking of Non-'News & Current Affairs' TV Channels/ Down-linking of TV Channels 100% Automatic 7.3 Other Conditions (a) Foreign investment in companies engaged in all the afore-stated services will be subject to relevant regulations and such terms and conditions, as may be specified from time to time, by the Ministry of Information and Broadcasting. (b) Foreign investment in the afore-stated broadcasting carriage services will be subject to the terms and conditions as may be specified by the Ministry of Information and Broadcasting, from time to time, in this regard. (c) Licensee shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... news and current affairs issued by the Ministry of Information & Broadcasting on 4-12-2008. 8.3 Publishing/ printing of Scientific and Technical Magazines/ specialty journals/periodicals, subject to compliance with the legal framework as applicable and guidelines issued in this regard from time to time by Ministry of Information and Broadcasting. 100% Government 8.4 Publication of facsimile edition of foreign newspapers 100% Government 8.4.1 Other conditions: (a) Foreign investment should be made by the owner of the original foreign newspapers whose facsimile edition is proposed to be brought out in India. (b) Publication of facsimile edition of foreign newspapers can be undertaken only by an entity incorporated or registered in India under the provisions of the Companies Act, 2013. (c) Publication of facsimile edition of foreign newspaper would also be subject to the Guidelines for publication of newspapers and periodicals dealing with news and current affairs and publication of facsimile edition of foreign newspapers issued by Ministry of Information & Broadcasting on 31-3-2006. 9. Civil Aviation 9.1 The Civil Aviation sector includes Airports, Scheduled and No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affic handling both of which shall include the activities as specified by the Ministry of Civil Aviation through the Aeronautical Information Circulars from time to time, and (iii) any other activity specified by the Central Government to be a part of either ramp handling or traffic handling. 9.2 Airports (a) Greenfield projects 100% Automatic (b) Existing projects 100% Automatic 9.3 Air Transport Services 3[(a) (i) Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline (ii) Regional Air Transport Service 100% Automatic up to 49% Government route beyond 49% (Automatic up to 100% for NRIs and OCIs)] (b) Non-Scheduled Air Transport Service 100% Automatic (c) Helicopter services/ seaplane services requiring DGCA approval 100% Automatic 9.4 Other Services under Civil Aviation sector (a) Ground Handling Services subject to sectoral regulations and security clearance 100% Automatic (b) Maintenance and Repair organizations; flying training institutes and technical training institutions 100% Automatic 9.5 Other Conditions (a) Air Transport Services would include Domestic Scheduled Passenger Airlines, Non-Scheduled Air Transport Services, helic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Built-up infrastructure 10.1 Construction-development projects (which would include development of townships, construction of residential/ commercial premises, roads or bridges, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure, townships) 100% Automatic 10.2 Other Conditions 10.2 (a) Each phase of the construction development project would be considered as a separate project. (b) The investor will be permitted to exit on completion of the project or after development of trunk infrastructure i.e. roads, water supply, street lighting, drainage and sewerage. (c) Notwithstanding anything contained at (b) above, a person resident outside India will be permitted 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 a person resident outside India to another person resident outside India, without repatriation of foreign investment will neither be subject to any lock-in period nor to any government approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relinquishment of the asset; or b. the extinguishment of any rights therein; or c. the compulsory acquisition thereof under any law; or d. any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or e. any transaction, by acquiring capital instruments 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. (6) Real estate business' means dealing in land and immovable property with a view to earning profit therefrom and does not include development of townships, construction of residential/ commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships; Explanation: a. Investment in units of Real Estate Investment Trusts (REITs) registered and regulated under the Securities and Exchange Board of India (REITs) regulations 2014 shall also be excluded from the definition of "real estate business". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units located in the Industrial Park. (d) "Allocable area" in the Industrial Park means- (i) in the case of plots of developed land - the net site area available for allocation to the units, excluding the area for common facilities. (ii) in the case of built up space - the floor area and built-up space utilized for providing common facilities. (iii) in the case of a combination of developed land and built-up space - the net site and floor area available for allocation to the units excluding the site area and built-up space utilized for providing common facilities. (e) "Industrial Activity" means manufacturing; electricity; gas and water supply; post and telecommunications; software publishing, consultancy and supply; data processing, database activities and distribution of electronic content; other computer related activities; basic and applied research and development on bio-technology, pharmaceutical sciences/ life sciences, natural sciences and engineering; business and management consultancy activities; and architectural, engineering and other technical activities. 11.2 Foreign investment in Industrial Parks would not be subject to the conditionali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le trading shall include resale, processing and thereafter sale, bulk imports with export/ exbonded warehouse business sales and B2B e-Commerce. 15.1.2 Other Conditions (a) For undertaking 'WT', requisite licenses/ registration/ permits, as specified under the relevant Acts/ Regulations/ Rules/ Orders of the State Government/ Government Body/ Government Authority /Local Self-Government Body under that State Government should be obtained. (b) Except in cases of sales to Government, sales made by the wholesaler shall be considered as 'cash and carry wholesale trading/ wholesale trading' with valid business customers, only when WT is made to the following entities: (i) Entities holding sales tax/ VAT registration/ service tax/ excise duty/Goods and Services Tax (GST) registration; or (ii) Entities holding trade licenses i.e. a license/ registration certificate/ membership certificate/ registration under Shops and Establishment Act, issued by a Government Authority/ Government Body/ Local Self-Government Authority, reflecting that the entity/ person holding the license/ registration certificate /membership certificate, as the case may be, is itself/ himself/ herse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-commerce business; (c) 'Inventory based model of e-commerce' means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly; (d) 'Market place model of e-commerce' means providing of an information technology platform by an ecommerce entity on a digital & electronic network to act as a facilitator between buyer and seller. (e) Digital & electronic network will include network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles etc. (f) Marketplace e-commerce entity will be permitted to enter into transactions with sellers registered on its platform on B2B basis. (g) E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services. 18[(h) E-commerce entity providing a marketplace will not exercise ownership or control over the inventory i.e. goods purported to be sold. Explanation : Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, security and other conditionalities. 15.3 Single Brand Product Retail Trading Foreign investment in Single Brand Product Retail Trading (SBRT) is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices. 100% 7[Automatic] 15.3.1 Other conditions (a) (Products to be sold should be of 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. 8[(d) A person resident outside India, whether owner of the brand or otherwise, shall be permitted to undertake 'single brand' product retail trading in the country for the specific brand, either directly by the brand owner or through a legally tenable agreement executed between the Indian entity undertaking single brand retail trading and the brand own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngle brand retail trading of products having 'state-of-art' and 'cutting-edge' technology and where local sourcing is not possible. Thereafter, condition mentioned at 15.3.1(e) above will be applicable. A Committee under the Chairmanship of Secretary, DIPP, with representatives from NITI Aayog, concerned Administrative Ministry and independent technical expert(s) on the subject will examine the claim of applicants on the issue of the products being in the nature of 'state-of-art' and 'cutting-edge' technology where local sourcing is not possible and give recommendations for such relaxation.] 15.4 Multi Brand Retail Trading (MBRT) 51% Government 15.4.1 Other Conditions (a) Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, can be unbranded. (b) Minimum amount to be brought in as foreign investment would be USD 100 million. (c) At least 50 percent of the total foreign investment brought in the first tranche of USD 100 million, shall be invested in 'back-end infrastructure' within three years, where 'back-end infrastructure' will include capital expenditure on all activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Government will have the first right to procure agricultural products. (h) The above policy is an enabling policy only and the State Governments/ Union Territories would be free to take their own decisions in regard to implementation of the policy. Therefore, retail sales outlets may be set up in those States/ Union Territories which have agreed, or agree in future, to allow foreign investment in MBRT under this policy. The States/ Union Territories which have conveyed their agreement are mentioned at 15.4.2. Such agreement, in future, to permit establishment of retail outlets under this policy, would be conveyed to the Government of India through the Department of Industrial Policy and Promotion and additions would be made to the said list. The establishment of the retail sales outlets will be in compliance of applicable State/ Union Territory laws/ regulations, such as the Shops and Establishments Act etc. (i) Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with foreign investment engaged in multi-brand retail trading. (j) Applications would be processed in the Department of Industrial Policy and Promotion, to determine whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R&D expenses which has been incurred in any of the three financial years immediately preceding the year of induction of foreign investment. (iii) 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. (iv) The administrative Ministry (s) i.e. Ministry of Health and Family Welfare, Department of Pharmaceuticals or any other regulatory Agency/Development as notified by Central Government from time to time, will monitor the compliance of conditionalities. Note : (1) Foreign investment up to 100% under the automatic route is permitted for manufacturing of medical devices. The abovementioned conditions will, therefore, not be applicable to greenfield as well as brownfield projects of this industry. (2) Medical device means :- (a) Any instrument, apparatus, appliance, implant, material or other article, whether used alone or in combination, including the software, intended by its manufacturer to be used specially for human beings or animals for one or more of the specific purposes of:- (aa) Diagnosis, prevention, monitoring, treatment or alleviation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way Electrification, (vi) Signalling systems, (vii) Freight terminals, (viii) Passenger terminals, (ix) Infrastructure in industrial park pertaining to railway line/ sidings including electrified railway lines and connectivity to main railway line and (x) Mass Rapid Transport Systems. 100% Automatic 17.2 Other Conditions (a) Foreign investment in this sector open to private-sector participation is subject to sectoral guidelines of Ministry of Railways. (b) Proposals involving foreign investment beyond 49 percent sensitive areas from security point of view, will be brought by the Ministry of Railways before the Cabinet Committee on Security (CCS) for consideration on a case to case basis. F FINANCIAL SERVICES Investment in financial services, other than those indicated below, would require prior Government approval. F.1 Asset Reconstruction Companies 100% Automatic F.1.1 Other Conditions (a) Investment limit of a sponsor in the shareholding of an ARC will be governed by the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Similarly, investment by institutional/ non-institutional investors will also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulated by banking supervisory authority in the home country and meeting Reserve Bank's licensing criteria will be allowed to hold 100 percent paid-up capital to enable them to set up a wholly-owned subsidiary in India. (iii) A foreign bank may operate in India through only one of the three channels viz., (i) branches (ii) a wholly-owned subsidiary (iii) a subsidiary with aggregate foreign investment up to a maximum of 74 percent in a private bank. (iv) A foreign bank will be permitted to establish a wholly-owned subsidiary either through conversion of existing branches into a subsidiary or through a fresh banking license. A foreign bank will be permitted to establish a subsidiary through acquisition of shares of an existing private sector bank provided at least 26 percent of the paid-up capital of the private sector bank is held by residents at all times consistent with para (c) above. (v) A subsidiary of a foreign bank will be subject to the licensing requirements and conditions broadly consistent with those for new private sector banks. (vi) Guidelines for setting up a wholly-owned subsidiary of a foreign bank will be issued separately by RBI. (vii) All applications b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies is subject to the Credit Information Companies (Regulation) Act, 2005 and regulatory clearance from the Reserve Bank. (b) FPI investment would be permitted subject to the following conditions: (i) A single entityshall directly or indirectly hold below 10 percent equity; (ii) Any acquisition in excess of 1 percent will have to be reported to Reserve Bank as a mandatory requirement; and (iii) FPIs investing in Credit Information Companies shall not seek a representation on the Board of Directors based upon their shareholding. F.8 Insurance F.8.1 (a) Insurance Company (b) Insurance Brokers (c) Third Party Administrators (d) Surveyors and Loss Assessors (e) Other Insurance Intermediaries appointed under the provisions of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) 49% Automatic F.8.2 Other Conditions (a) Foreign investment in this sector shall be subject to compliance with the provisions of the Insurance Act, 1938 and subject to necessary license/ approval from the Insurance Regulatory & Development Authority of India for undertaking insurance and related activities. (b) An Indian Insurance company shall ensure that its ownership a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Services 100% Automatic F.10.1 Other Conditions (a) Other Financial Services will mean financial services activities regulated by financial sector regulators, viz., Reserve Bank, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, Pension Fund Regulatory and Development Authority, National Housing Bank or any other financial sector regulator as may be notified by the Government of India. (b) Foreign investment in 'Other Financial Services' activities shall be subject to conditionalities, including minimum capitalization norms, as specified by the concerned Regulator/Government Agency (c) 'Other Financial Services' activities need to be regulated by one of the Financial Sector Regulators. In all such financial services activity which are not regulated by any Financial Sector Regulator or where only part of the financial services activity is regulated or where there is doubt regarding the regulatory oversight, foreign investment up to 100 percent will be allowed under Government approval route subject to conditions including minimum capitalization requirement, as may be decided by the Government. (d) Any activity which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nus for ensuring compliance with this condition will rest with the Indian entity carrying out single-brand product retail trading in India. The investing entity shall provide evidence to this effect at the time of seeking approval, including a copy of the licensing/ franchise/ sub-licence agreement, specifically indicating compliance with the above condition. The requisite evidence should be filed with the RBI for the automatic route and the Government for cases involving approval." 9. Omitted vide Notification No. FEMA. 20(R) (1)/2018-RB dated 26-03-2018 before it was read as "(g) Applications seeking permission of the Government for foreign investment exceeding 49 percent in a company which proposes to undertake single brand retail trading in India shall be made to 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 Government approval. In case of foreign investment up to 49 percent, the list of products/ product categories proposed to be sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19-RB dated 31-01-2019 before it was read as
"E-commerce entity' means a company incorporated under Companies Act, 2013"
18. Substituted vide NOTIFICATION No. FEMA. 20(R) (6)/2019-RB dated 31-01-2019 before it was read as
"(h) E-commerce entity providing a marketplace will not exercise ownership over the inventory i.e. goods purported to be sold. Such an ownership over the inventory will render the business into inventory based model. "
19. Substituted vide NOTIFICATION No. FEMA. 20(R) (6)/2019-RB dated 31-01-2019 before it was read as
"(i) An e-commerce entity will not permit more than 25 percent of the sales value on financial year basis affected through its marketplace from one vendor or their group companies."
20. Substituted vide NOTIFICATION No. FEMA. 20(R) (6)/2019-RB dated 31-01-2019 before it was read as
"(m) E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field."
21. Inserted vide NOTIFICATION No. FEMA. 20(R) (6)/2019-RB dated 31-01-2019
22. Inserted vide NOTIFICATION No. FEMA. 20(R) (6)/2019-RB dated 31-01-2019
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