Complete Overview of Fdi Policy of India

Department of Industrial Policy and Promotion under the Ministry of Commerce and Industry releases the FDI Policy Circular whenever there is a big change in the FDI policy of the government. In this article, you will find concise information regarding FDI allowed in various sector. This information becomes handy in Exams like RBI GRADE B, UGC NET, UPSC Civil Services etc.

List of items prohibited in FDI

1. Lottery Business including Government/private lottery, online lotteries, etc.
2. Gambling and Betting including casinos etc.
3. Chit funds
4. Nidhi company
5. Trading in Transferable Development Rights (TDRs)
6. Real Estate Business or Construction of Farm Houses ‘Real estate business’ shall not include development of townships, construction of residential /commercial premises, roads or bridges and Real Estate Investment Trusts (REITs) registered and regulated under the SEBI (REITs) Regulations 2014.
   1. But real-estate broking service is eligible for 100% FDI under automatic route.
7. Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
8. Activities/sectors not open to private sector investment e.g.(I) Atomic Energy and (II) Railway operation other than permitted activities mentioned as follow:

Sector/Activity	% of Equity/FDI Cap	Entry Route
Railway Infrastructure	100%	Automatic

Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities.

Foreign equity Sectoral Cap

Minimum Sectoral cap = the maximum amount which can be invested by foreign investors in an entity is composite and includes all types of foreign investments, direct and indirect in any form like FDI, FII,  FPI, NRI, FVCI, LLPs, DRs and Investment Vehicle of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations. It does not include Foreign Loan. But it includes FCCB as these bond can b converted into equity.

Sector/Activity	% of Equity/FDI Cap	Entry Route
Agriculture	100% in most of the activity.	Automatic
Petroleum & Natural Gas: Petroleum refining by PSUs without any domestic equity dilution	49%	Automatic
Petroleum & Natural Gas: other	100%	Automatic
Defence	100%	Automatic up to 49% Government route beyond 49%
Broadcasting Carriage Services	100%	Automatic
Broadcasting Content Services ü  FM Radio, ‘News & Current Affairs’ TV Channels	49%	Government
Broadcasting Content Services ü  Non-‘News & Current Affairs’ TV	100%	Automatic
Print Media ü  newspaper and periodicals, Indian editions of foreign magazines dealing with news and current affairs	26%	Government
Print Media ü  scientific and technical magazines/specialty journals/ periodicals, facsimile edition of foreign newspapers	100%	Government
Civil Aviation: Airports, Air Transport Services etc.	100%	Automatic
Civil Aviation: Scheduled/Regional Air Transport Service Including in Air India	100%	Automatic up to 49% (Automatic up to 100% for NRIs) Government route beyond 49%
Satellites- establishment and operation	100%	Government
Private Security Agencies	74%	Automatic up to 49% Government route beyond 49% and up to 74%
Telecom Services	100%	Automatic up to 49% Government route beyond 49%
Single Brand product retail trading	100%	Automatic ( Earlier : Automatic up to 49% and  Government route beyond 49%
Multi Brand Retail Trading	51%	Government
Banking- Private Sector	74%	Automatic up to 49% Government route beyond 49% and up to 74%
Banking- Public Sector	20%	Government
Infrastructure Company in the Securities Market	49%	Automatic
Insurance	49%	Automatic
Pension Sector	49%	Automatic
Power Exchanges	49%	Automatic ( earlier it was allowed in secondary market, now allowed in primary market as well)
Pharmaceuticals – Greenfield	100%	Automatic
Pharmaceuticals- Brownfield	100%	Automatic up to 74% Government route beyond 74%

For more Detail refer:  http://dipp.nic.in/sites/default/files/CFPC_2017_FINAL_RELEASED_28.8.17.pdf ( Page 23)