Government of India made changes to the FDI policy at a meeting chaired by Prime Minister Narendra Modi. The government on Monday (20 June, 2016) announced fresh liberalisation of FDI rules throwing open food retail, airlines and private security firms to higher overseas investment. Now we will know what are the key changes. Key changes include allowing 100% FDI under government approval route for trading, including through e-commerce in respect of food products manufactured or produced in India. Govt. also permitted up to 100 per cent FDI in defence sector.
So making it brief, we got to know that Govt has allowed up to—
- 100% foreign direct investment (FDI) in defence through the approval route.
- 100% FDI in food product e-commerce.
- 100% FDI in greenfield pharma via the automatic route.
- 100% in browfield pharma – of which 74% will be through automatic route.
- 100% FDI in scheduled airlines, and up to 49% FDI in airlines through automatic route.
Now most of the sectors would be under automatic approval route, except a small negative list. With these changes, India is now the most open economy in the world for FDI,” said an official statement.
The extant FDI policy on pharmaceutical sector provides for 100 per cent FDI under automatic route in greenfield pharma and FDI up to 100 per cent under government approval in brownfield pharma. Objective of promoting the development of this sector, it has been decided to permit up to 74 per cent FDI under automatic route in brownfield pharmaceuticals and government approval route beyond 74 per cent will continue.
Civil Aviation Sector
The extant FDI policy on Airports permits 100 per cent FDI under automatic route in Greenfield Projects and 74 per cent FDI in Brownfield Projects under automatic route. FDI beyond 74 per cent for Brownfield Projects is under government route.
Foreign Investment in Defence Sector up to 100 per cent
The present FDI regime permits 49 per cent FDI participation in the equity of a company under automatic route. Foreign investment beyond 49 per cent has been permitted through approval route in cases resulting in access to modern technology in the country or for other reasons.