With the recent announcement made by Government of India on 20 June 2016, regarding liberalization of Foreign Direct Investment regime, India has now become the most open economy in the world. Highlights of the latest changes are as follows:
1. 100% FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India.
2. FDI in Defence Sector: Foreign investment beyond 49%o has now been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded. The condition of access to 'state-of-art' technology in the country has been done away with.
3. FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions.
4. Pharmaceutical: (a) 100% FDI under automatic route in greenfield pharmaceutical projects. (b) 74% FDI under automatic route in brownheld pharmaceuticals projects and 100% FDI under government approval in these projects.
5. Civil Aviation Sector: (a) 100% FDI under automatic route in Brownfield Airport projects. (b) FDI up to 49%o under automatic route in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service and 100% FDI in these services under Government approval.
6. Private Securitv Agencies: FDI up to 49%is now permitted under automatic route in this sector and FDI beyond 49% and upto 74% would be permitted under government approval route.
7. Establishment of branch office, liaison office or proiect office: For establishment of branch office, liaison office or project offrce or any other place of business in India if the principal business of the applicant is Defence, Telecomo Private Security or Information and Broadcasting, it has been decided that approval of Reserve Bank of India or separate security clearance would not be required in cases where FIPB approval or license/permission b), the concerned Ministry/Regulator has alreadv been granted.
8. Animal Husbandry: As per FDI Policy 2016, foreign direct investment in Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture and Apiculture is allowed 100% under Automatic Route under controlled conditions. It has been decided to do away with this requirement of 'controlled conditions' for FDI in these activities.
9. Single Brand Retail Trading: It has now been decided to relax local sourcing norms up to three years and a relaxed sourcing regime for another five years for entities undertaking Single Brand Retail Trading of products having'state-of-art'and'cutting edge'technology. In the last two years, Government has brought major FDI policy reforms in a number of sectors viz. Defence, Construction Development, Insurance, Pension Sector, Broadcasting Sector, Tea, Coffee, Rubber, Cardamom, Palm Oil Tree and Olive Oil Tree Plantations, Single Brand Retail Trading, Manufacturing Sector, Limited Liability Partnerships, Civil Aviation, Credit Information Companies, Satellites- establishment/operation and Asset Reconstruction companies. Measures undertaken by the Government have resulted in increased FDI inflows at US$ 55.46 billion in financial vear 2015-16, as against US$ 36.04 billion during the financial year 2013-14. This is the highest ever FDI inflow for a particular financial year.