ANNOUNCEMENT 16 Jul 2013

In July 2013, the government of India announced changed rules for foreign investors.

NUMBER OF INTERVENTIONS

2

  • 1 harmful
  • 0 neutral
  • 1 liberalising
Inception date: 22 Aug 2013 | Removal date: open ended
Still in force

FDI: Entry and ownership rule

On 16 July 2013, the Government of India approved an increase for FDI limits in several sectors (see summary table below). For sectors where the approval is made through the Government route, the proposal has to be submitted to the Foreign Investment Promotion Board (FIPB) which reviews the proposals before approval.

 

 

Sector
Old Rules
New Rules
 
% of FDI/Equity
Entry Route
 % of FDI/Equity
Entry Route
Defense Production
26%
Government route
No change
Proposals that may result in access to modern technologies may be approved beyond 26% on a case basis
Insurance Sector
26%
Automatic Route
49%
Automatic route
Basic & Cellular Services,etc.
74%
Automatic up to 49%, Government route above 49-74%
100%
Automatic up to 49%, Government route above 49%
Asset reconstruction company
74% of paid up capital (FDI+FII)
Government route
100%
Automatic up to 49%, Government route above 49%
Petroleum andNatural Gas and Refining
49%
Government Route
49%
Automatic Route
Commodity Exchanges
49% (FDI +FII) - Investment by registered FII limited to 23% and under FDI limited to 26%
Government route (for FDI)
49%
Automatic Route
Power Exchanges
49% (FDI+FII) - FII limit of 23% of paid up capital, FDI 26%
Government route (for FDI)
49%
Automatic Route
Stock Exchanges, Depositories,Corporations
49% (FDI+FII) - FII limit of 23% of paid up capital, FDI 26%
Government route (for FDI)
49%
Automatic Route
Credit Information Companies
49% (FDI+FII)
Government route
74%
Automatic route
Courier Services
100%
Government route
100%
Automatic route
Single Brand product retail trading
100%
Government route
100%
Automatic up to 49%, Government route above 49%
 

 Other Amendments -

  • Tea sector including plantations - The condition to compulsarily divest 26% equity in favour of an Indian partner/public within 5 years has been removed
  • Single Brand Retail Trading - Multiple non-resident entities instead of a single non-resident entity can undertake Single Brand Retail Trading in the country
  • Asset Reconstruction Companies - Persons resident outside India can invest in the capital of such companies up to 49% in the automatic route and beyond 49% by seeking government approval. Earlier, such investments were allowed only after government approval.

AFFECTED SECTORS

 
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AFFECTED PRODUCTS

 
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Inception date: 22 Aug 2013 | Removal date: open ended
Still in force

FDI: Entry and ownership rule

The following amendments have been made de-liberalising FDI investments -

  • Defense - Investments by Foreign Institutional Investors through the Portfolio Investment Scheme is not permitted
  • Test marketing - 100% FDI limit under the government route for FDI in Test Marketing of goods for which the company has an approval for manufacture has been removed
  • Commodity Exchanges - FDI in such exchanges will be also subject to the guidelines of the Department of Consumer Affaris or the Forward Markets Commission
 
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