The FDI liberalization approved by the Union Cabinet of India on 10 January 2018 includes the following components:
- Single Brand Retail Trading: 100% FDI has been allowed under the automatic route as opposed to 49% earlier. Further, earlier such single brand retail entities were required to source at least 30% of their purchases from India for their Indian operations. The government has allowed the entities and/or their group companies to set off this requirement against purchases from India for their global operations for the first 5 years. After 5 years, they will have to meet the 30% requirement for their Indian single brand entity.
- Civil Aviation: FDI of up to 49% under the approval route has been extended to the previously exempt national carrier, Air India, as well.
- Construction Development: Real Estate brokering services are clarified as not amounting to real estate business and therefore are eligible for 100% FDI investments.
- Power Exchanges: Foreign Institutional and Portfolio Investors are now allowed to invest in Power Exchanges in the Primary Market in addition to the secondary market.
- Medical devices: The definition of medical devices within the FDI policy was limited to the scope of its definition in the Drugs and Cosmetics Act, 1940. This reference to the latter Act has been removed and the scope of the medical devices sector eligible for foreign investments has been expanded.
The liberalisation also included procedural aspects:
- The issue of equity shares against non-cash considerations has now been permitted under the automatic route for sectors where investments are permitted under the automatic route.
- FDI in investment companies is allowed under the automatic route provided the activities of such companies are regulated by a financial regulator.