Govt reviews FDI policy

Defines 'manufacturing' for foreign investment

The government on Tuesday reviewed the foreign direct investment (FDI) policy in various sectors, notified the recently opened up sectors for FDI, and defined the term ‘manufacturing’ with a view to attract more overseas investment into the country.

“A manufacturer is permitted to sell his products manufactured in India through wholesale or retail, including eCommerce, without government approval,” said a press note on the review of the FDI policy. Soon after the press note, DIPP secretary Amitabh Kant said that the government aims at allowing 97 per cent FDI through the automatic route, without requiring any bureaucratic approval.

“As of now, India has thrown open 92 per cent of the FDI route through automatic channel,” he said. “We do not want any businessman to come to Udyog Bhawan or the Finance Ministry; that is also the mandate from Prime Minister Narendra Modi,” Kant said.

The DIPP Secretary said a lot has been done in the area of easing investment in the highway sector, and the results would be visible in the near future. Contracts worth Rs 3.5 lakh crore have been awarded in the highway sector through different channels like EPC, since the PPP model was not successful. 

Earlier this month, the government had opened up several key sectors including defence, construction, civil aviation and media to foreign investment. It had also eased norms for businesses such as single-brand retail and private banking, and allowed the Foreign Investment Promotion Board (FIPB) to clear proposals up to Rs 5,000 crore, from Rs 3,000 crore earlier.

The government also allowed 100 per cent FDI in plantation activities under which, the plantations of tea, coffee, rubber, cardamom, palm and olive will be allowed under the automatic route.

Earlier, 100 per cent FDI was not allowed in these areas. In defence, the government had allowed foreign investment of up to 49 per cent under the automatic route on November 10. This was notified through the press note. Earlier, this sector was under the government approval route.

Investments of over 49 per cent will now be cleared by the FIPB instead of the Cabinet Committee on Security. Portfolio investors and foreign venture capital firms can also invest up to 49 per cent, as against 24 per cent earlier.

Similarly, in construction-development projects, which include development of township, construction of residential or commercial projects, roads or bridges, hotels, resorts, hospitals, educational institutions, the government notified 100 per cent FDI through automatic route.

Foreign investment cap in non-scheduled air transport service was increased to 100 per cent through automatic route. Other sectors where FDI cap was raised were teleport, DTH, cable networks and mobile TV. The FDI limit was also raised to 49 per cent in up-linking of news and current affairs channels.