RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI-400 001
Notification No. FEMA. 354/2015-RB
October 30, 2015
Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident outside India) (Tenth Amendment) Regulations, 2015
In exercise of the powers conferred by clause (b) of sub-section (3) of
Section 6 and Section 47 of the Foreign Exchange Management Act, 1999 (42 of
1999), the Reserve Bank of India hereby makes the following amendments in the
Foreign Exchange Management (Transfer or issue of Security by a Person Resident
outside India) Regulations, 2000 (Notification No. FEMA. 20/2000-RB dated 3rd
May 2000) namely:-
1. Short Title & Commencement
(i) These Regulations may be called the Foreign Exchange Management (Transfer
or Issue of Security by a Person Resident outside India) (Tenth Amendment)
Regulations, 2015.
(ii) They shall come into force from the date of their publication in the
Official Gazette
2. Amendment of the Regulation
In the Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident outside India) Regulations, 2000, (Notification No.FEMA 20/2000-RB
dated 3rd May 2000), (A) in Regulation 14,
(i) in sub-regulation 1, in the existing clause ‘(x)’ the following shall be
inserted, namely:
“Explanation:
(i) Total Foreign Investment shall include all types of foreign investments,
direct and indirect, regardless of whether the said investments have been made
under Schedule 1, Schedule 2, Schedule 2A, Schedule 3, Schedule 6, Schedule 8,
Schedule 9 and Schedule 10 of Foreign Exchange Management (Transfer or Issue of
Security by a Person Resident outside India) Regulations, 2000.
(ii) Foreign Currency Convertible Bonds (FCCB) and Depository Receipts (DR)
having underlying of instruments which can be issued under Schedule 5, being in
the nature of debt, shall not be treated as foreign investment. However, any
equity holding by a person resident outside India resulting from any conversion
of any debt instrument under any arrangement shall be reckoned as foreign
investment.”
(ii) in sub-regulation 3, the existing clause (ii) shall be substituted by the
following, namely:
“Counting of indirect foreign investment: For the purpose of computation of
indirect foreign investment, foreign investment in an Indian company shall
include all types of foreign investments regardless of whether the said
investments have been made under Schedules 1, 2 (FII holding as on March 31), 2A
(FPI holding as on March 31), 3, 6, 8, 9 and 10 of FEMA (Transfer or Issue of
Security by Persons Resident Outside India) Regulations, 2000. FCCBs and DRs
having underlying of instruments which can be issued under Schedule 5, being in
the nature of debt, shall not be treated as foreign investment. However, any
equity holding by a person resident outside India resulting from conversion of
any debt instrument under any arrangement shall be reckoned as foreign
investment.”
B. Amendment of Schedule 1
(i) In Schedule 1, in paragraph 2 (1), after the words “from time to time’
the following proviso shall be inserted
“Provided that
- In the sectors/activities mentioned in the Annex B to the Schedule,
foreign investment upto the limit indicated against each sector/activity is
allowed subject to the conditions of the extant policy on specified sectors
and applicable laws/regulations; security and other conditionalities. In
sectors/activities not listed therein, foreign investment is permitted upto
100% on the automatic route, subject to applicable laws/regulations;
security and other conditionalities.
- Wherever there is a requirement of minimum capitalization it shall include
share premium received along with the face value of the share, only when it
is received by the company upon issue of the shares to the non-resident
investor. Amount paid by the transferee during post-issue transfer of shares
beyond the issue price of the share, cannot be taken into account while
calculating minimum capitalization requirement.
- “Sectoral cap” i.e. the maximum amount which can be invested by foreign
investors in an entity, unless provided otherwise, is composite and includes
all types of foreign investments, direct and indirect, regardless of whether
the said investments have been made under Schedule 1, 2, 2(A), 3, 6, 8, 9
and 10 of FEMA (Transfer or Issue of Security by Persons Resident Outside
India) Regulations, 2000. FCCBs and DRs having underlying of instruments
which can be issued under Schedule 5, being in the nature of debt, shall not
be treated as foreign investment. However, any equity holding by a person
resident outside India resulting from conversion of any debt instrument
under any arrangement shall be reckoned as foreign investment under the
composite cap. Sectoral cap is as per table appended below.
- Total foreign investment, direct and/or indirect, in an entity will not
exceed the sectoral/statutory cap.
- Foreign investment in sectors under Government approval route resulting in
transfer of ownership and/or control of Indian entities from resident Indian
citizens to non-resident entities will be subject to Government approval.
Foreign investment in sectors under automatic route but with
conditionalities, resulting in transfer of ownership and/or control of
Indian entities from resident Indian citizens to non-resident entities, will
be subject to compliance of such conditionalities.
- Notwithstanding anything contained in paragraphs (a), (b) and (e) above,
portfolio investment upto aggregate foreign investment level of 49% or
sectoral/statutory cap, whichever is lower, will not be subject to either
Government approval or compliance of sectoral conditions, as the case may
be, if such investment does not result in transfer of ownership and/or
control of Indian entities from resident Indian citizens to non-resident
entities. Other foreign investments will be subject to conditions of
Government approval and compliance of sectoral conditions as laid down in
the FDI policy.
- The onus of compliance with the sectoral/statutory caps on foreign
investment and attendant conditions, if any, shall be on the company
receiving foreign investment.
(ii) In the existing provision, for the words, “ Provided”, the words
“Provided further” shall be substituted.
(iii) In the Foreign Exchange Management (Transfer or Issue of Security by a
Person Resident outside India) Regulations, 2000, (Notification No.FEMA
20/2000-RB dated 3rd May 2000), in Schedule 1, Annex B shall be substituted as
under:
Foreign Investments caps and entry route in various sectors
SL. No |
Sector/Activity |
Foreign Investment Cap (%) |
Entry Route |
Agriculture |
1. |
Agriculture & Animal Husbandry |
|
|
|
-
Floriculture,
horticulture, Apiculture and Cultivation Of vegetables & mushrooms
under controlled conditions;
-
Development and
production of seeds and planting material;
-
Animal Husbandry
(including breeding of dogs), Pisiculture, Aquaculture, under
controlled conditions; and
-
Services related
to agro and allied sectors.
Note : Besides the above, FDI is not allowed in any other agricultural
sector/activity |
100% |
Automatic |
1.1 |
Other Conditions
|
|
|
|
I. For companies
dealing with development of transgenic seeds/vegetables, the following
conditions apply:
(i) When dealing with
genetically modified seeds or planting material the company shall comply
with safety requirements in accordance with laws enacted under the
Environment (Protection) Act on the genetically modified organisms.
(ii) Any import of
genetically modified materials if required shall be subject to the
conditions laid down vide Notifications issued under Foreign Trade
(Development and Regulation) Act, 1992.
(iii) The company
shall comply with any other Law, Regulation or Policy governing
genetically modified material in force from time to time.
(iv) Undertaking of
business activities involving the use of genetically engineered cells
and material shall be subject to the receipt of approvals from Genetic
Engineering Approval Committee (GEAC) and Review Committee on Genetic
Manipulation (RCGM).
(v) Import of
materials shall be in accordance with National Seeds Policy.
|
|
II. The term ‘under
controlled conditions’ covers the following:
(i) ‘Cultivation
under controlled conditions’ for the categories of Floriculture,
Horticulture, Cultivation of vegetables and Mushrooms is the practice of
cultivation wherein rainfall, temperature, solar radiation, air humidity
and culture medium are controlled artificially. Control in these
parameters may be effected through protected cultivation under green
houses, net houses, poly houses or any other improved infrastructure
facilities where micro- climatic conditions are regulated
anthropogenically.
(ii) In case of
Animal Husbandry, scope of the term ‘under controlled conditions’ covers
–
(a) Rearing of
animals under intensive farming systems with stall- feeding. Intensive
farming system will require climate systems (ventilation,
temperature/humidity management), health care and nutrition, herd
registering/pedigree recording, use of machinery, waste management
systems as prescribed by the National Livestock Policy 2013 and in
conformity with the existing ‘Standard Operating Practices and Minimum
Standard Protocol.”
(b) Poultry breeding
farms and hatcheries where micro-climate is controlled through advanced
technologies like incubators, ventilation systems etc.
(iii) In the case of
pisciculture and aquaculture, scope of the term ‘under controlled
conditions’ covers –
(a) Aquariums
(b) Hatcheries where
eggs are artificially fertilized and fry are hatched and incubated in an
enclosed environment with artificial climate control.
(iv) In the case of
apiculture, scope of the term ‘‘under controlled conditions’ covers
–Production of honey by bee-keeping, except in forest/wild, in
designated spaces with control of emperatures and climatic factors like
humidity and artificial feeding during lean seasons.
|
2. |
Tea Plantation
|
2.1 |
Tea sector including
tea plantations
Note: Besides the
above, FDI is not allowed in any other plantation sector/activity
|
100%
|
Government
|
2.2 |
Other Condition
|
|
|
|
Prior approval of the
State Government concerned is required in case of any future land use
change
|
3. |
MINING
|
|
|
3.1 |
Mining and
Exploration of metal and non-metal ores including diamond, gold, silver
and precious ores but excluding titanium bearing minerals and its ores;
subject to the Mines and Minerals (Development & Regulation) Act, 1957.
|
100%
|
Automatic
|
3.2 |
Coal and Lignite
|
|
|
|
(1) Coal & Lignite mining for captive consumption by power projects,
iron & steel and cement units and other eligible activities permitted
under and subject to the provisions of Coal Mines (Nationalization) Act,
1973. |
100%
|
Automatic
|
|
(2) Setting up coal
processing plants like washeries, subject to the condition that the
company shall not do coal mining and shall not sell washed coal or sized
coal from its coal processing plants in the open market and shall supply
the washed or sized coal to those parties who are supplying raw coal to
coal processing plants for washing or sizing.
|
100%
|
Automatic
|
3.3 |
Mining and mineral separation of titanium bearing minerals and ores, its
value addition and integrated activities
|
3.3.1 |
Mining and mineral
separation of titanium bearing minerals & ores, its value addition and
integrated activities subject to sectoral regulations and the Mines and
Minerals (Development and Regulation) Act, 1957.
|
100%
|
Government
|
3.3.2 |
Other Conditions
|
|
|
|
India has large
reserves of beach sand minerals in the coastal stretches around the
country. Titanium bearing minerals viz. Ilmenite, rutile and leucoxene
and Zirconium bearing minerals including zircon are some of the beach
sand minerals which have been classified as 'prescribed substances'
under the Atomic Energy Act, 1962.
Under the Industrial
Policy Statement 1991, mining and production of minerals classified as
'prescribed substances' and specified in the Schedule to the Atomic
Energy (Control of Production and Use) Order, 1953 were included in the
list of industries reserved for the public sector. Vide Resolution No.
8/1(1)/97- PSU /1422 dated 6th October, 1998 issued by the Department of
Atomic Energy laying down the policy for exploitation of beach sand
minerals, private participation including Foreign Direct Investment
(FDI), was permitted in mining and production of Titanium ores
(Ilmenite, Rutile and Leucoxene) and Zirconium minerals (Zircon).
Vide Notification No.
S.O. 61(E), dated 18-1-2006, the Department of Atomic Energy re-notified
the list of 'prescribed substances' under the Atomic Energy Act, 1962.
Titanium bearing ores and concentrates (Ilmenite, Rutile and Leucoxene)
and Zirconium, its alloys and compounds and minerals/ concentrates
including Zircon, were removed from the list of 'prescribed substances'.
(i) FDI for
separation of titanium bearing minerals & ores will be subject to the
following additional conditions viz:
(A) value addition
facilities are set up within India along with transfer of technology;
(B) disposal of
tailings during the mineral separation shall be carried out in
accordance with regulations framed by the Atomic Energy Regulatory Board
such as Atomic Energy (Radiation Protection) Rules, 2004 and the Atomic
Energy (Safe Disposal of Radioactive Wastes) Rules, 1987.
(ii) FDI will not be
allowed in mining of 'prescribed substances' listed in the Notification
No. SO 61(E), dated 18-1-2006 issued by the Department of Atomic Energy.
|
|
Clarification:(1) For
titanium bearing ores such as Ilmenite, Leucoxene and Rutile,
manufacture of titanium dioxide pigment and titanium sponge constitutes
value addition, Ilmenite can be processed to produce Synthetic Rutile or
Titanium Slag as an intermediate value added product.
(2) The objective is
to ensure that the raw material available in the country is utilized for
setting up downstream industries and the technology available
internationally is also made available for setting up such industries
within the country. Thus, if with the technology transfer, the objective
of the FDI Policy can be achieved, the conditions prescribed at (I) (A)
above shall be deemed to be fulfilled.
|
4. |
Petroleum & Natural Gas
|
4.1 |
Exploration activities of oil and natural gas fields, infrastructure
related to marketing of petroleum products and natural gas, marketing of
natural gas and petroleum products, petroleum product pipelines, natural
gas/pipelines, LNG Regasification infrastructure, market study and
formulation and Petroleum refining in the private sector, subject to the
existing sectoral policy and regulatory framework in the oil marketing
sector and the policy of the Government on private participation in
exploration of oil and the discovered fields of national oil companies.
|
100% |
Automatic |
4.2 |
Petroleum refining by the Public Sector Undertakings (PSUs), without any
disinvestment or dilution of domestic equity in the existing PSUs. |
49% |
Automatic |
5. |
Defence |
5.1 |
Defence Industry subject to Industrial license under the Industries
(Development & Regulation) Act, 1951 |
49% |
Government route up to 49% Above 49% to Cabinet Committee on Security
(CCS) on case to case basis, wherever it is likely to result in access
to modern and 'state-of-art' technology in the country. |
|
Note: (i) The above
limit of 49% is composite and includes all kinds of foreign investments
i.e. Foreign Direct Investment (FDI), Foreign Institutional Investors
(FIIs), Foreign Portfolio Investors (FPIs), Non Resident Indians (NRIs)
and Foreign Venture Capital Investors (FVCI) regardless of whether the
said investments have been made under Schedule 1 (FDI), 2 (FII), 2A
(FPI), 3 (NRI),6 (FVCI) and 8 (QFI) of FEMA (Transfer or Issue of
Security by Persons Resident Outside India) Regulations.
(ii) Portfolio
investment by FPIs/FIIs/NRIs and investments by FVCIs together will not
exceed 24% of the total equity of the investee/joint venture company.
Portfolio investments will be under automatic route.
|
5.2 |
Other Conditions |
|
-
Licence
applications will be considered and licences given by the Department
of Industrial Policy & Promotion, Ministry of Commerce & Industry,
in consultation with Ministry of Defence and Ministry of External
Affairs.
-
The applicant
company seeking permission of the Government for FDI up to 49%
should be an Indian company owned and controlled by resident Indian
citizens.
-
The management of
the applicant company should be in Indian hands with majority
representation on the Board as well as the Chief Executives of the
company/partnership firm being resident Indians.
-
Chief Security
Officer (CSO) of the investee/ joint venture company should be
resident Indian citizen.
-
Full particulars
of the Directors and the Chief Executives should be furnished along
with the applications.
-
The Government
reserves the right to verify the antecedents of the foreign
collaborators and domestic promoters including their financial
standing and credentials in the world market. Preference would be
given to original equipment manufacturers or design establishments
and companies having a good track record of past supplies to Armed
Forces, Space and Atomic energy sections and having an established R
& D base.
-
There would be no
minimum capitalization for the FDI. A proper assessment, however,
needs to be done by the management of the applicant company
depending upon the product and the technology. The licensing
authority would satisfy itself about the adequacy of the net worth
of the non-resident investor taking into account the category of
weapons and equipment that are proposed to be manufactured.
-
The Ministry of
Defence is not in a position to give purchase guarantee for products
to be manufactured. However, the planned acquisition programme for
such equipment and overall requirements would be made available to
the extent possible.
-
Investee/joint
venture company should be structured to be self-sufficient in areas
of product design and development. The investee/joint venture
company along with manufacturing facility, should also have
maintenance and life cycle support facility of the product being
manufactured in India.
-
Import of
equipment for pre-production activity including development of
prototype by the applicant company would be permitted.
-
Adequate safety
and security procedures would need to be put in place by the
licensee once the licence is granted and production commences. These
would be subject to verification by authorized Government agencies.
-
The standards and
testing procedures for equipment to be produced under licence from
foreign collaborators or from indigenous R & D will have to be
provided by the licensee to the Government nominated quality
assurance agency under appropriate confidentiality clause. The
nominated quality assurance agency would inspect the finished
product and would conduct surveillance and audit of the Quality
Assurance Procedures of the licensee. Self-certification would be
permitted by the Ministry of Defence on case to case basis, which
may involve either individual items, or group of items manufactured
by the licensee. Such permission would be for a fixed period and
subject to renewals.
-
Purchase
preference and price preference may be given to the Public Sector
organizations as per guidelines of the Department of Public
Enterprises.
-
The Licensee
shall be allowed to sell Defence items to Government entities under
the control of Ministry of Home Affairs (MHA), State Governments,
Public Sector Undertakings (PSUs) and other valid Defence Licensed
Companies without prior approval of the Department of Defence
Production (DoDP). However, for sale of the items to any other
entity, the Licensee shall take prior permission from the Department
of Defence Production, Ministry of Defence.
-
All applications
seeking permission of the Government for FDI in defence would be
made to the Secretariat of Foreign Investment Promotion Board (FIPB)
in the Department of Economic Affairs.
-
Applications for
FDI up to 49% will follow the existing procedure with proposals
involving inflows in excess of Rs. 3000 crore being approved by
Cabinet Committee on Economic Affairs (CCEA).
-
Based on the
recommendation of the Ministry of Defence and FIPB, approval of the
Cabinet Committee on Security (CCS) will be sought by the Ministry
of Defence in respect of cases seeking permission of the Government
for FDI beyond 49% which are likely to result in access to modern
and `state-of-art' technology in the country.
-
Proposals for FDI
beyond 49% with proposed inflow in excess of Rs. 3000 crores, which
are to be approved by CCS will not require further approval of the
Cabinet Committee on Economic Affairs (CCEA).
-
Government
decision on applications for FDI in defence industry sector will be
normally communicated within a time frame of 10 weeks from the date
of acknowledgement.
-
For the proposal
seeking Government approval for foreign investment beyond 49%
applicant should be Indian company/foreign investor. Further
condition at para (iii) above will not apply on such proposals.
|
Services Sector |
Information Services |
6. |
Broadcasting |
6.1 |
Broadcasting Carriage Services |
6.1.1 |
-
Teleports
(setting up of up-linking HUBs/Teleports);
-
Direct to Home
(DTH);
-
Cable Networks
[Multi System Operators (MSOs) operating at National or State or
District level and undertaking up gradation of networks towards
digitalization and addressability]:
-
Mobile TV;
-
Headend-in-the
Sky Broadcasting Service (HITS)
|
74% |
Automatic up to 49%
Government route
beyond 49% and up to 74%
|
6.1.2 |
Cable Networks (Other
MSOs not undertaking upgradation of networks towards digitalization and
addressability and Local Cable Operators (LCOs)). |
49% |
Automatic |
6.2 |
Broadcasting Content Services |
|
|
6.2.1 |
Terrestrial Broadcasting FM (FM Radio), subject
to such terms and conditions, as specified from time to time, by
Ministry of Information & Broadcasting, for grant of permission for
setting up of FM Radio stations. |
26% |
Government |
6.2.2 |
Up-Linking of ‘News & Current Affairs’ TV Channels |
26% |
Government |
6.2.3 |
Up-linking a Non-'News & Current Affairs' TV Channels/Down-linking of TV
Channels |
100% |
Government |
6.3 |
FDI for Up-linking/Down-linking TV Channels will be subject to
compliance with the relevant Up-linking/Down-linking Policy notified by
the Ministry of Information & Broadcasting from time to time. |
6.4 |
Foreign Investment (FI) in companies engaged in all the aforestated
services will be subject to relevant regulations and such terms and
conditions, as may be specified from time to time, by the Ministry of
Information and Broadcasting. |
6.5 |
The foreign investment (FI) limit in companies engaged in the afore
stated activities shall include, in addition to FDI, investment by
Foreign Institutional Investors (FIIs), Foreign Portfolio
Investors(FPIs), Non-Resident Indians (NRIs), Foreign Currency
Convertible Bonds (FCCBs), [ Depository Receipts issued under Schedule
10 of these Regulations with equity shares or compulsorily and
mandatorily convertible preference shares or compulsory and mandatorily
convertible debentures or warrant or any other security in which foreign
direct investment can be made in terms of Schedule1 of the principal
Regulations, as underlying] (GDRs) and convertible preference shares
held by foreign entities.] |
6.6 |
Foreign investment in
the aforestated broadcasting carriage services will be subject to the
following security conditions/ terms:
Mandatory Requirement for Key Executives of the Company
(i) The majority of
Directors on the Board of the Company shall be Indian Citizens.
(ii) The Chief
Executive Officer (CEO), Chief Officer In-charge of technical network
operations and Chief Security Officer should be resident Indian citizens
Security Clearance of Personnel
(iii) The Company,
all Directors on the Board of Directors and such key executives like
Managing Director/ Chief Executive Officer, Chief Financial Officer
(CFO), Chief Security Officer (CSO), Chief Technical Officer (CTO),
Chief Operating Officer (COO), shareholders who individually hold 10% or
more paid-up capital in the company and any other category, as may be
specified by the Ministry of Information and Broadcasting from time to
time, shall require to be security cleared.
In case of the
appointment of Directors on the Board of the Company and such key
executives like Managing Director/Chief Executive Officer, Chief
Financial Officer (CFO), Chief Security Officer (CSO), Chief Technical
Officer (CTO), Chief Operating Officer (COO), etc., as may be specified
by the Ministry of Information and Broadcasting from time to time, prior
permission of the Ministry of Information and Broadcasting shall have to
be obtained.
It shall be
obligatory on the part of the company to also take prior permission from
the Ministry of Information and Broadcasting before effecting any change
in the Board of Directors.
(iv) The Company
shall be required to obtain security clearance of all foreign personnel
likely to be deployed for more than 60 days in a year by way of
appointment, contract, and consultancy or in any other capacity for
installation, maintenance, operation or any other services prior to
their deployment. The security clearance shall be required to be
obtained every two years.
Permission vis-a-vis Security Clearance
(v) The permission
shall be subject to permission holder/licensee remaining security
cleared throughout the currency of permission. In case the security
clearance is withdrawn the permission granted is liable to be terminated
forthwith.
(vi) In the event of
security clearance of any of the persons associated with the permission
holder/licensee or foreign personnel being denied or withdrawn for any
reasons whatsoever, the permission holder/licensee will ensure that the
concerned person resigns or his services terminated forthwith after
receiving such directives from the Government, failing which the
permission/license granted shall be revoked and the company shall be
disqualified to hold any such Permission/license in future for a period
of five years.
Infrastructure/Network/Software related requirement
(vii) The
officers/officials of the licensee companies dealing with the lawful
interception of Services will be resident Indian citizens.
(viii) Details of
infrastructure/ network diagram (technical details of the network) could
be provided on a need basis only, to equipment suppliers/manufactures
and the affiliate of the licensee company. Clearance from the licensor
would be required if such information is to be provided to anybody else.
(ix) The Company
shall not transfer the subscribers' databases to any person/place
outside India unless permitted by relevant Law.
(x) The Company must
provide traceable identity of their subscribers.
Monitoring, Inspection and Submission of Information
(xi) The Company
should ensure that necessary provision (hardware/software) is available
in their equipment for doing the Lawful interception and monitoring from
a centralized location as and when required by Government.
(xii) The company, at
its own costs, shall, on demand by the Government or its authorized
representative, provide the necessary equipment, services and facilities
at designated place(s) for continuous monitoring or the broadcasting
service by or under supervision of the Government or its authorized
representative.
(xiii) The Government
of India, Ministry of Information & Broadcasting or its authorized
representative shall have the right to inspect the broadcasting
facilities. No prior permission/intimation shall be required to exercise
the right of Government or its authorized representative to carry out
the inspection. The company will, if required by the Government or its
authorized representative, provide necessary facilities for continuous
monitoring for any particular aspect of the company's activities and
operations. Continuous monitoring, however, will be confined only to
security related aspects, including screening of objectionable content.
(xiv) The inspection
will ordinarily be carried out by the Government of India, Ministry of
Information & Broadcasting or its authorized representative after
reasonable notice, except in circumstances where giving such a notice
will defeat the very purpose of the inspection.
(xv) The company
shall submit such information with respect to its services as may be
required by the Government or its authorized representative, in the
format as may be required, from time to time.
(xvi) The permission
holder/licensee shall be liable to furnish the Government of India or
its authorized representative or TRAI or its authorized representative,
such reports, accounts, estimates, returns or such other relevant
information and at such periodic intervals or such times as may be
required.
(xvii) The service
providers should familiarize/train designated officials of the
Government or officials of TRAI or its authorized representative(s) in
respect of relevant operations/features of their systems.
National Security Conditions
(xviii) It shall be
open to the licensor to restrict the Licensee Company from operating in
any sensitive area from the National Security angle. The Government of
India, Ministry of Information and Broadcasting shall have the right to
temporarily suspend the permission of the permission holder/Licensee in
public interest or for national security for such period or periods as
it may direct. The company shall immediately comply with any directives
issued in this regard failing which the permission issued shall be
revoked and the company disqualified to hold any such permission, in
future, for a period of five years.
(xix) The company
shall not import or utilize any equipment, which are identified as
unlawful and/or render network security vulnerable.
Other conditions
(xx) Licensor
reserves the right to modify these conditions or incorporate new
conditions considered necessary in the interest of national security and
public interest or for proper provision of broadcasting services.
(xxi) Licensee will
ensure that broadcasting service installation carried out by it should
not become a safety hazard and is not in contravention of any statute,
rule or regulation and public policy.
|
7. |
Print Media |
7.1 |
Publishing of newspaper and periodicals dealing with news and current
affairs |
26% |
Government |
7.2 |
Publication of Indian editions of foreign magazines dealing with news
and current affairs |
26% |
Government |
7.2.1 |
Other conditions |
|
|
|
(i) 'Magazine', for
the purpose of these guidelines, will be defined as a periodical
publication, brought out on non-daily basis, containing public news or
comments on public news.
(ii) Foreign
investment would also be subject to the Guidelines for Publication of
Indian editions of foreign magazines dealing with news and current
affairs issued by the Ministry of Information & Broadcasting on
4-12-2008.
|
7.3 |
Publishing/printing of Scientific and Technical Magazines/specialty
journals/periodicals, subject to compliance with the legal framework as
applicable and guidelines issued in this regard from time to time by
Ministry of Information and Broadcasting.
|
100% |
Government |
7.4 |
Publication of facsimile edition of foreign newspapers |
100% |
Government |
7.4.1 |
Other conditions: |
|
|
|
(i) FDI should be
made by the owner of the original foreign newspapers whose facsimile
edition is proposed to be brought out in India.
(ii) Publication of
facsimile edition of foreign newspapers can be undertaken only by an
entity incorporated or registered in India under the provisions of the
Companies Act, as applicable.
(iii) Publication of
facsimile edition of foreign newspaper would also be subject to the
Guidelines for publication of newspapers and periodicals dealing with
news and current affairs and publication of facsimile edition of foreign
newspapers issued by Ministry of Information & Broadcasting on
31-3-2006, as amended from time to time.
|
8. |
Civil Aviation |
8.1 |
The Civil Aviation
sector includes Airports, Scheduled and Non-Scheduled domestic passenger
airlines, Helicopter services/Seaplane services, Ground Handling
Services, Maintenance and Repair organizations; Flying training
institutes; and Technical training institutions.
For the purposes of the Civil Aviation sector:
(i) "Airport" means a
landing and taking off area for aircrafts, usually with runways and
aircraft maintenance and passenger facilities and includes aerodrome as
defined in clause (2) of section 2 of the Aircraft Act, 1934;
(ii) "Aerodrome"
means any definite or limited ground or water area intended to be used,
either wholly or in part, for the landing or departure of aircraft, and
includes all buildings, sheds, vessels, piers and other structures
thereon or pertaining thereto;
(iii) "Air transport
service" means a service for the transport by air of persons, mails or
any other thing, animate or inanimate, for any kind of remuneration
whatsoever, whether such service consists of a single flight or series
of flights;
(iv) "Air Transport
Undertaking" means an undertaking whose business includes the carriage
by air of passengers or cargo for hire or reward;
(v) "Aircraft
component" means any part, the soundness and correct functioning of
which, when fitted to an aircraft, is essential to the continued
airworthiness or safety of the aircraft and includes any item of
equipment;
(vi) "Helicopter"
means a heavier than air aircraft supported in flight by the reactions
of the air on one or more power driven rotors on substantially vertical
axis;
(vii) "Scheduled air
transport service" means an air transport service undertaken between the
same two or more places and operated according to a published time table
or with flights so regular or frequent that they constitute a
recognizably systematic series, each flight being open to use by members
of the public;
(viii) "Non-Scheduled
air Transport service" means any service which is not a scheduled air
transport service and will include Cargo airlines;
(ix) "Cargo airlines"
would mean such airlines which meet the conditions as given in the Civil
Aviation Requirements issued by the Ministry of Civil Aviation;
(x) "Seaplane" means
an aeroplane capable normally of taking off from and alighting solely on
water;
(xi) "Ground
Handling" means (i) ramp handling, (ii) traffic handling both of which
shall include the activities as specified by the Ministry of Civil
Aviation through the Aeronautical Information Circulars from time to
time, and (iii) any other activity specified by the Central Government
to be a part of either ramp handling or traffic handling.
|
8.2 |
Airports |
|
|
|
(a) Greenfield
projects
(b) Existing projects
|
100%
100%
|
Automatic
Automatic upto 74% ;
Government
Route beyond 74%
|
8.3 |
Air Transport Services |
|
|
|
(1) Scheduled Air Transport Service/Domestic Scheduled Passenger Airline |
49% (100% for NRIs) |
Automatic |
|
(2) Non-Scheduled Air Transport Service |
74% (100% for NRIs) |
Automatic upto 49%; Government
Route beyond 49% and up to 74% |
|
(3) Helicopter services/ seaplane services requiring DGCA approval |
100% |
Automatic |
8.3.1 |
Other Conditions |
|
|
|
(a) Air Transport
Services would include Domestic Scheduled Passenger Airlines;
Non-Scheduled Air Transport Services, helicopter and seaplane services.
(b) Foreign airlines
are allowed to participate in the equity of companies operating Cargo
airlines, helicopter and seaplane services, as per the limits and entry
routes mentioned above.
(c) Foreign airlines
are also allowed to invest in the capital of Indian companies, operating
scheduled and non-scheduled air transport services, up to the limit of
49% of their paid-up capital. Such investment would be subject to the
following conditions:
(i) It would be made
under the Government approval route.
(ii) The 49% limit
will subsume FDI and FII/FPI investment.
(iii) The investments
so made would need to comply with the relevant regulations of SEBI, such
as the Issue of Capital and Disclosure Requirements (ICDR) Regulations/
Substantial Acquisition of Shares and Takeovers (SAST) Regulations, as
well as other applicable rules and regulations.
(iv) A Scheduled
Operator's Permit can be granted only to a company:
-
that is
registered and has its principal place of business within India;
-
the Chairman
and at least two-thirds of the Directors of which are citizens of
India; and
-
the
substantial ownership and effective control of which is vested in
Indian nationals.
(v) All foreign
nationals likely to be associated with Indian scheduled and
non-scheduled air transport services, as a result of such investment
shall be cleared from security view point before deployment; and
(vi) All technical
equipment that might be imported into India as a result of such
investment shall require clearance from the relevant authority in the
Ministry of Civil Aviation.
Note: (i) The FDI limits/entry routes, mentioned at paragraph 8.3(1) and
8.3(2) above, are applicable in the situation where there is no
investment by foreign airlines.
(ii) The dispensation
for NRIs regarding FDI up to 100% will also continue in respect of the
investment regime specified at paragraph 8.3.1(c) (ii) above.
(iii) The policy
mentioned at 8.3.1(c) above is not applicable to M/s Air India Limited
|
8.3.2 |
Foreign Airlines in the capital of the Indian companies, operating
schedule and non-scheduled air transport services |
49% (100% for NRIs) |
Government |
8.4 |
Other Services under Civil Aviation sector |
|
|
|
(1) Ground Handling Services subject to sectoral regulations and
security clearance |
74% (100% for NRIs) |
Automatic upto 49%; Government
Route beyond 49% and up to 74% |
|
(2) Maintenance and Repair organizations; flying training institutes and
technical training institutions |
100% |
Automatic |
9. |
Courier services for
carrying packages, parcels and other items which do not come within the
ambit of the Indian Post
Office Act, 1898 and excluding the activity relating to the distribution
of letters |
100% |
Automatic |
10. |
Construction Development: Townships, Housing, Built-up infrastructure |
10.1 |
Construction-development projects (which would include development of
townships, construction of residential/commercial premises, roads or
bridges, hotels, resorts, hospitals, educational institutions,
recreational facilities, city and regional level infrastructure,
townships) |
100% |
Automatic |
|
Investment will be
subject to the following conditions:
(A) Minimum area to
be developed under each project would be as under:
- In case of development of serviced plots, no minimum land area
requirement.
- In case of construction-development projects, a minimum floor
area of 20,000 sq. meter.
(B) Investee company
will be required to bring minimum FDI of US$ 5 million within six months
of commencement of the project. The commencement of the project will be
the date of approval of the building plan/layout plan by the relevant
statutory authority. Subsequent tranches of FDI can be brought till the
period of ten years from the commencement of the project or before the
completion of project, whichever expires earlier.
(C) (i) The investor
will be permitted to exit on completion of the project or after
development of trunk infrastructure i.e. roads, water supply, street
lighting, drainage and sewerage.
(ii) The Government
may, in view of facts and circumstances of a case, permit repatriation
of FDI or transfer of stake by one non-resident investor to another
non-resident investor, before the completion of project. These proposals
will be considered by FIPB on case to case basis inter-alia with
specific reference to Note (i).
(D) The project shall
conform to the norms and standards, including land use requirements and
provision of community amenities and common facilities, as laid down in
the applicable building control regulations, bye-laws, rules, and other
regulations of the State Government/Municipal/Local Body concerned.
(E) The Indian
investee company will be permitted to sell only developed plots. For the
purposes of this policy "developed plots" will mean plots where trunk
infrastructure i.e. roads, water supply, street lighting, drainage and
sewerage, have been made available.
(F) The Indian
investee company shall be responsible for obtaining all necessary
approvals, including those of the building/layout plans, developing
internal and peripheral areas and other infrastructure facilities,
payment of development, external development and other charges and
complying with all other requirements as prescribed under applicable
rules/bye-laws/regulations of the State Government/ Municipal/Local Body
concerned.
(G) The State
Government/ Municipal/ Local Body concerned, which approves the building
/ development plans, will monitor compliance of the above conditions by
the developer.
Note:
(i) It is clarified
that FDI is not permitted in an entity which is engaged or proposes to
engage in real estate business, construction of farm houses and trading
in transferable development rights (TDRs).
"Real estate
business" will have the same meaning as provided in FEMA Notification
No. 1/2000-RB dated May 03, 2000 read with RBI Master Circular i.e.
dealing in land and immovable property with a view to earning profit or
earning income there from and does not include development of townships,
construction of residential/ commercial premises, roads or bridges,
educational institutions, recreational facilities, city and regional
level infrastructure, townships.
(ii) The conditions
at (A) to (C) above, will not apply to Hotels & Tourist Resorts;
Hospitals; Special Economic Zones (SEZs); Educational Institutions, Old
Age Homes and Investment by NRIs.
(iii) The conditions
at (A) and (B) above, will also not apply to investee/joint venture
companies which commit at least 30 percent of the total project cost for
low cost affordable housing.
(iv) An Indian
company, which is the recipient of FDI, shall procure a certificate from
an architect empanelled by any Authority, authorized to sanction
building plan to the effect that the minimum floor area requirement has
been fulfilled.
(v) 'Floor area' will
be defined as per the local laws/regulations of the respective State
governments/Union territories.
(vi) Completion of
the project will be determined as per the local bye-laws/ rules and
other regulations of State Governments.
(vii) Project using
at least 40% of the FAR/FSI for dwelling unit of floor area of not more
than 140 square meter will be considered as Affordable Housing Project
for the purpose of FDI policy in Construction Development Sector. Out of
the total FAR/ FSI reserved for Affordable Housing, at least one-fourth
should be for houses of floor area of not more than 60 square meter.
(viii) It is
clarified that 100% FDI under automatic route is permitted in completed
projects for operation and management of townships, malls/ shopping
complexes and business centres.
|
11. |
Industrial Parks -New and existing
|
100%
|
Automatic
|
11.1 |
(i) "Industrial Park"
is a project in which quality infrastructure in the form of plots of
developed land or built up space or a combination with common
facilities, is developed and made available to all the allottee units
for the purposes of industrial activity.
(ii) “Infrastructure”
refers to facilities required for functioning of units located in the
Industrial Park and includes roads (including approach roads), railway
line/sidings including electrified railway lines and connectivities to
the main railway line, water supply and sewerage, common effluent
treatment facility, telecom network, generation and distribution of
power, air conditioning.
(iii) “Common
Facilities” refer to the facilities available for all the units located
in the industrial park, and include facilities of power, roads
(including approach roads), railway line/sidings including electrified
railway lines and connectivities to the main railway line, water supply
and sewerage, common effluent treatment, common testing, telecom
services, air conditioning, common facility buildings, industrial
canteens, convention/conference halls, parking, travel desks, security
service, first aid center, ambulance and other safety services, training
facilities and such other facilities meant for common use of the units
located in the Industrial Park.
(iv) "Allocable area"
in the Industrial Park means-
(a) in the case of
plots of developed land - the net site area available for allocation to
the units, excluding the area for common facilities.
(b) in the case of
built up space - the floor area and built-up space utilized for
providing common facilities.
(c) in the case of a
combination of developed land and built-up space - the net site and
floor area available for allocation to the units excluding the site area
and built-up space utilized for providing common facilities.
(v) "Industrial
Activity" means manufacturing; electricity; gas and water supply; post
and telecommunications; software publishing, consultancy and supply;
data processing, database activities and distribution of electronic
content; other computer related activities; basic and applied R&D on
bio-technology, pharmaceutical sciences/life sciences, natural sciences
and engineering; business and management consultancy activities; and
architectural, engineering and other technical activities.
|
11.2 |
FDI in Industrial
Parks would not be subject to the conditionalities applicable for
construction development projects etc. spelt out in para 11 above,
provided the Industrial Parks meet with the under-mentioned conditions:
(i) it would comprise
of a minimum of 10 units and no single unit shall occupy more than 50%
of the allocable area;
(ii) the minimum
percentage of the area to be allocated for industrial activity shall not
be less than 66% of the total allocable area.
|
12. |
Satellites - Establishment and operation |
|
|
12.1 |
Satellites Establishment and operation, subject to the sectoral
guidelines of Department of Space/ISRO |
74% |
Government |
13. |
Private Security Agencies |
49% |
Government |
14. |
Telecom services
(including Telecom Infrastructure Providers Category-l)
All telecom services
including Telecom Infrastructure Providers Category-I, viz. Basic,
Cellular, United Access Services, Unified license (Access services),
Unified License, National/ International Long Distance, Commercial
V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile
Personal Communications Services (GMPCS), All types of ISP licenses,
Voice Mail/Audiotex / UMS, Resale of IPLC, Mobile Number Portability
services, Infrastructure Provider Category-I (providing dark fibre,
right of way, duct space, tower) except Other Service Providers.
|
100% |
Automatic upto 49%
Government route
beyond 49%
|
14.1.1 |
Other Condition
|
|
|
|
FDI up to 100% with
49% on the automatic route and beyond 49% on the government route
subject to observance of licensing and security conditions by licensee
as well as investors as notified by the Department of Telecommunications
(DoT) from time to time, expect “Other Service Providers”, which are
allowed 100% FDI on the automatic route.
|
15. |
Trading |
|
|
15.1 |
(i) Cash & Carry Wholesale Trading/Wholesale Trading (including sourcing
from MSEs) |
100% |
Automatic |
15.1.1 |
Definition: Cash & Carry Wholesale trading/Wholesale trading, would mean
sale of goods/merchandise to retailers, industrial, commercial,
institutional or other professional business users or to other
wholesalers and related subordinated service providers. Wholesale
trading would, accordingly, imply sales for the purpose of trade,
business and profession, as opposed to sales for the purpose of personal
consumption. The yardstick to determine whether the sale is wholesale or
not would be the type of customers to whom the sale is made and not the
size and volume of sales. Wholesale trading would include resale,
processing and thereafter sale, bulk imports with ex-port/ ex-bonded
warehouse business sales and B2B e-Commerce. |
15.1.2 |
Guidelines for Cash & Carry Wholesale Trading/Wholesale Trading (WT):
(a) For undertaking
‘WT', requisite licenses/registration/permits, as specified under the
relevant Acts/Regulations/Rules/Orders of the State
Government/Government Body/Government Authority /Local Self-Government
Body under that State Government should be obtained.
(b) Except in case of
sales to Government, sales made by the wholesaler would be considered as
'cash & carry wholesale trading/wholesale trading' with valid business
customers, only when WT are made to the following entities:
(i) Entities holding
sales tax/VAT registration/service tax/excise duty registration; or
(ii) Entities holding
trade licenses i.e. a license/registration certificate/membership
certificate/registration under Shops and Establishment Act, issued by a
Government Authority/Government Body/ Local Self-Government Authority,
reflecting that the entity/person holding the license/registration
certificate/membership certificate, as the case may be, is
itself/himself/herself engaged in a business involving commercial
activity; or
(iii) Entities
holding permits/license etc. for undertaking retail trade (like
tehbazari and similar license for hawkers) from Government
Authorities/Local Self Government Bodies; or
(iv) Institutions
having certificate of incorporation or registration as a society or
registration as public trust for their self consumption.
Note: An Entity, to whom WT is made, may fulfil anyone of the 4
conditions.
(c) Full records
indicating all the details of such sales like name of entity, kind of
entity, registration/ license/permit etc. number, amount of sale etc.
should be maintained on a day to day basis.
(d) WT of goods would
be permitted among companies of the same group. However, such WT to
group companies taken together should not exceed 25% of the total
turnover of the wholesale venture.
(e) WT can be
undertaken as per normal business practice, including extending credit
facilities subject to applicable regulations.
(f) A Wholesale/Cash
& carry trader cannot open retail shops to sell to the consumer
directly.
|
15.2 |
B2B E-commerce activities |
100% |
Automatic |
|
E-commerce activities refer to the activity of buying and selling by a
company through the e-commerce platform. Such companies would engage
only in Business to Business (B2B) e-commerce and not in retail trading,
inter alia implying that existing restrictions on FDI in domestic
trading would be applicable to ecommerce as well. |
15.3 |
Single Brand product retail trading |
100% |
Automatic up to 49%. Government route beyond 49% |
|
(1) Foreign
Investment in Single Brand product retail trading is aimed at attracting
investments in production and marketing, improving the availability of
such goods for the consumer, encouraging increased sourcing of goods
from India, and enhancing competitiveness of Indian enterprises through
access to global designs, technologies and management practices.
(2) FDI in Single
Brand product retail trading would be subject to the following
conditions:
(a) Products to be
sold should be of a 'Single Brand' only.
(b) Products should
be sold under the same brand internationally i.e. products should be
sold under the same brand in one or more countries other than India.
(c) 'Single Brand'
product-retail trading would cover only products which are branded
during manufacturing.
(d) A non-resident
entity or entities, whether owner of the brand or otherwise, shall be
permitted to undertake ‘single brand’ product retail trading in the
country for the specific brand, directly or through a legally tenable
agreement, with the brand owner for undertaking single brand product
retail trading. The onus for ensuring compliance with this condition
will rest with the Indian entity carrying out single-brand product
retail trading in India. The investing entity shall provide evidence to
this effect at the time of seeking approval, including a copy of the
licensing/franchise/sub-licence agreement, specifically indicating
compliance with the above condition. The requisite evidence should be
filed with the RBI for the automatic route and SIA/FIPB for cases
involving approval.
(e) In respect of
proposals involving FDI beyond 51 %, sourcing of 30% of the value of
goods purchased, will be done from India, preferably from MSMEs, village
and cottage industries, artisans and craftsmen, in all sectors. The
quantum of domestic sourcing will be self-certified by the company, to
be subsequently checked, by statutory auditors, from the duly certified
accounts which the company will be required to maintain. This
procurement requirement would have to be met, in the first instance, as
an average of five years; total value of the goods purchased, beginning
1st April of the year during which the first tranche of FDI is received.
Thereafter, it would have to be met on an annual basis. For the purpose
of ascertaining the sourcing requirement, the relevant entity would be
the company, incorporated in India, which is the recipient of FDI for
the purpose of carrying out singlebrand product retail trading.
(f) Retail trading,
in any form, by means of e-commerce, would not be permissible, for
companies with FDI, engaged in the activity of single brand retail
trading.
(3) Applications
seeking permission of the Government for FDI exceeding 49% in a company
which proposes to undertake single brand retail trading in India would
be made to the Secretariat for Industrial Assistance (SIA) in the
Department of Industrial Policy & Promotion. The applications would
specifically indicate the product/ product categories which are proposed
to be sold under a ‘Single Brand’. Any addition to the product/ product
categories to be sold under ‘Single Brand’ would require a fresh
approval of the Government. In case of FDI upto 49%, the list of
products/ product categories proposed to be sold except food products
would be provided to the RBI.
(4) Applications
would be processed in the Department of Industrial Policy & Promotion,
to determine whether the proposed investment satisfies the notified
guidelines, before being considered by the FIPB for Government approval.
|
15.4 |
Multi Brand Retail Trading
|
51%
|
Government
|
|
(1) FDI in multi
brand retail trading, in all products, will be permitted, subject to the
following conditions:
(i) Fresh
agricultural produce, including fruits, vegetables, flowers, grains,
pulses, fresh poultry, fishery and meat products, may be unbranded.
(ii) Minimum amount
to be brought in, as FDI, by the foreign investor, would be US $ 100
million.
(iii) At least 50% of
total FDI brought in the first tranche of US $ 100 million, shall be
invested in 'back-end infrastructure' within three years, where
'back-end infrastructure' will include capital expenditure on all
activities, excluding that on front-end units; for instance, back-end
infrastructure will include investment made towards processing,
manufacturing, distribution, design improvement, quality control,
packaging, logistics, storage, warehouse, agriculture market produce
infrastructure etc. Expenditure on land cost and rentals, if any, will
not be counted for purposes of back-end infrastructure. Subsequent
investment in the back-end infrastructure would be made by the MBRT
retailer as needed, depending upon its business requirements.
(iv) At least 30% of
the value of procurement of manufactured/processed products purchased
shall be sourced from Indian micro, small and medium industries, which
have a total investment in plant & machinery not exceeding US $ 2.00
million. This valuation refers to the value at the time of installation,
without providing for depreciation. The 'small industry' status would be
reckoned only at the time of first engagement with the retailer and such
industry shall continue to qualify as a 'small industry' for this
purpose, even if it outgrows the said investment of US $ 2.00 million
during the course of its relationship with the said retailer. Sourcing
from agricultural co-operatives and farmers co-operatives would also be
considered in this category. The procurement requirement would have to
be met, in the first instance, as an average of five years total value
of the manufactured/processed products purchased, beginning lst April of
the year during which the first tranche of FDI is received. Thereafter,
it would have to be met on an annual basis.
(v)
Self-certification by the company, to ensure compliance of the
conditions at serial Nos. (i), (ii) and (iv) above, which could be
cross-checked, as and when required. Accordingly, the investors shall
maintain accounts, duly certified by statutory auditors.
(vi) Retail sales
outlets may be set up only in cities with a population of more than 10
lakh as per the 2011 Census or any other cities as per the decision of
the respective State Governments, and may also cover an area of 10 kms.
Around the municipal/urban agglomeration limits of such cities; retail
locations will be restricted to conforming areas as per the Master/Zonal
Plans of the concerned cities and provision will be made for requisite
facilities such as transport connectivity and parking.
(vii) Government will
have the first right to procurement of agricultural products.
(viii) The above
policy is an enabling policy only and the State Governments/Union
Territories would be free to take their own decisions in regard to
implementation of the policy. Therefore, retail sales outlets may be set
up in those States/Union Territories which have agreed, or agree in
future, to allow FDI in MBRT under this policy. The list of States/Union
Territories which have conveyed their agreement is at (2) below. Such
agreement, in future, to permit establishment of retail outlets under
this policy, would be conveyed to the Government of India through the
Department of Industrial Policy & Promotion and additions would be made
to the list at (2) below accordingly. The establishment of the retail
sales outlets will be in compliance of applicable State/Union Territory
laws/ regulations, such as the Shops and Establishments Act etc.
(ix) Retail trading,
in any form, by means of e-commerce, would not be permissible, for
companies with FDI, engaged in the activity of multi-brand retail
trading.
(x) Applications
would be processed in the Department of Industrial Policy & Promotion,
to determine whether the proposed investment satisfies the notified
guidelines, before being considered by the FIPB for Government approval.
(2) List of
States/Union Territories as mentioned in Paragraph 16.4.(1) (viii)
1.Andhra Pradesh
2.Assam
3.Delhi
4.Haryana
5.Himachal Pradesh
6.Jammu & Kashmir
7. Karnataka
8.Maharashtra
9.Manipur
10.Rajasthan
11.Uttarakhand
12.Daman & Diu and Dadra and Nagar Haveli (Union Territories)
|
|
FINANCIAL SERVICES
Foreign investment in other financial services, other than those
indicated below, would require prior approval of the Government: |
F.1 |
Asset Reconstruction Companies |
|
|
F.1.1 |
‘Asset Reconstruction Company’ (ARC) means a company registered with the
Reserve Bank of India under Section 3 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (SARFAESI Act). |
100% |
Automatic up to 49%
Government route beyond 49% |
F.1.1.2 |
Other Conditions
(i) Persons resident
outside India can invest in the capital of Asset Reconstruction
Companies (ARCs) registered with Reserve Bank, up to 49% on the
automatic route, and beyond 49% on the Government route.
(ii) No sponsor may
hold more than 50% of the shareholding in an ARC either by way of FDI or
by routing it through an FII/FPI controlled by the single sponsor.
(iii) The total
shareholding of an individual FII/FPI shall be below 10% of the total
paid-up capital.
(iv) FIIs/FPIs can
invest in the Security Receipts (SRs) issued by ARCs registered with
Reserve Bank. FIIs/FPIs can invest up to 74 per cent of each tranche of
scheme of SRs. Such investment should be within the FII/FPI limit on
corporate bonds prescribed from time to time, and sectoral caps under
extant FDI Regulations should also be complied with.
(v) All investments
would be subject to provisions of section 3(3) (f) of Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002.
|
F.2 |
Banking - Private sector |
|
|
F.2.1 |
Banking - Private sector
This 74% limit will
include investment under the Portfolio Investment Scheme (PIS) by
FIIs/FPIs, NRIs and shares acquired prior to September 16, 2003 by
erstwhile OCBs, and continue to include IPOs, Private placements,
GDR/ADRs and acquisition of shares from existing shareholders.
|
74% ( FII/FPI upto 49%) |
Automatic upto 49%
Government route
beyond 49% and upto 74%
|
F.2.2 |
Other conditions: |
|
|
|
(1) The aggregate
foreign investment in a private bank from all sources will be allowed -
up to a maximum of 74 per cent of the paid-up capital of the Bank. At
all times, at least 26 per cent of the paid up capital will have to be
held by residents, except in regard to a wholly-owned subsidiary of a
foreign bank.
(2) The stipulations
as above will be applicable to all investments in existing private
sector banks also.
(3) The permissible
limits under portfolio investment schemes through stock exchanges for
FIIs/FPIs and NRIs will be as follows:
(i) In the case of
FIIs/FPIs, as hitherto, individual FII/FPI holding is restricted to
below 10 per cent of the total paid-up capital, aggregate limit for all
FIIs/FPIs/QFIs cannot exceed 24 per cent of the total paid-up capital,
which can be raised to 49 per cent of the total paid-up capital by the
bank concerned through a resolution by its Board of Directors followed
by a special resolution to that effect by its General Body.
(a) Thus, the FII/FPI
investment limit will continue to be within 49 per cent of the total
paid-up capital.
(b) In the case of
NRIs, as hitherto, individual holding is restricted to 5 per cent of the
total paid-up capital both on repatriation and non-repatriation basis
and aggregate limit cannot exceed 10 percent of the total paid-up
capital both on repatriation and non-repatriation basis. However, NRI
holding can be allowed up to 24 per cent of the total paid-up capital
both on repatriation and nonrepatriation basis provided the banking
company passes a special resolution to that effect in the General Body.
(c) Applications for
foreign direct investment in private banks having joint
venture/subsidiary in insurance sector may be addressed to the Reserve
Bank of India (RBI) for consideration in consultation with the Insurance
Regulatory and Development Authority (IRDA) in order to ensure that the
49 per cent limit of foreign shareholding applicable for the insurance
sector is not being breached.
(d) Transfer of
shares under FDI from residents to non-residents will continue to
require approval of RBI and Government as per Regulation 14(5) as
applicable
(e) The policies and
procedures prescribed from time to time by RBI and other institutions
such as SEBI, D/o Company Affairs and IRDA on these matters will
continue to apply.
(f) RBI guidelines
relating to acquisition by purchase or otherwise of shares of a private
bank, if such acquisition results in any person owning or controlling 5
per cent or more of the paid-up capital of the private bank will apply
to non-resident investors as well.
(ii) Setting up of a
subsidiary by foreign banks
(a) Foreign banks
will be permitted to either have branches or subsidiaries but not both.
(b) Foreign banks
regulated by banking supervisory authority in the home country and
meeting Reserve Bank's licensing criteria will be allowed to hold 100
per cent paid-up capital to enable them to set up a wholly-owned
subsidiary in India.
(c) A foreign bank
may operate in India through only one of the three channels viz., (i)
branches (ii) a wholly-owned subsidiary and (iii) a subsidiary with
aggregate foreign investment up to a maximum of 74 per cent in a private
bank.
(d) A foreign bank
will be permitted to establish a wholly-owned subsidiary either through
conversion of existing branches into a subsidiary or through a fresh
banking license. A foreign bank will be permitted to establish a
subsidiary through acquisition of shares of an existing private sector
bank provided at least 26 per cent of the paid-up capital of the private
sector bank is held by residents at all times consistent with para (i)
(b) above.
(e) A subsidiary of a
foreign bank will be subject to the licensing requirements and
conditions broadly consistent with those for new private sector banks.
(f) Guidelines for
setting up a wholly-owned subsidiary of a foreign bank will be issued
separately by RBI.
(g) All applications
by a foreign bank for setting up a subsidiary or for conversion of their
existing branches to subsidiary in India will have to be made to the
RBI.
(iii) At present
there is a limit of ten per cent on voting rights in respect of banking
companies, and this should be noted by potential investor. Any change in
the ceiling can be brought about only after final policy decisions and
appropriate Parliamentary approvals.
|
F.3 |
Banking - Public Sector |
|
|
F.3.1 |
Banking - Public Sector subject to Banking Companies (Acquisition &
Transfer of Undertakings) Acts, 1970/80.
This ceiling (20%) is also applicable to the State Bank of India and its
associate banks. |
20% |
Government |
F.4 |
Commodity Exchanges |
|
|
F.4.1 |
(i) Futures trading in commodities are regulated under the Forward
Contracts (Regulation) Act, 1952. Commodity Exchanges, like Stock
Exchanges, are infrastructure companies in the commodity futures market.
With a view to infuse globally acceptable best practices, modern
management skills and latest technology, it was decided to allow foreign
investment in Commodity Exchanges.
2. For the purposes of this Chapter,
(i) "Commodity
Exchange" is a recognized association under the provisions of the
Forward Contracts (Regulation) Act, 1952, as amended from time to time,
to provide exchange platform for trading in forward contracts in
commodities.
(ii) "Recognized
association" means an association to which recognition for the time
being has been granted by the Central Government under section 6 of the
Forward Contracts (Regulation) Act, 1952.
(iii) "Association"
means any body of individuals, whether incorporated or not, constituted
for the purposes of regulating and controlling the business of the sale
or purchase of any goods and commodity derivative.
(iv) "Forward
contract" means a contract for the delivery of goods and which is not a
ready delivery contract.
(v) "Commodity
derivative" means-
• a contract for
delivery of goods, which is not a ready delivery contract; or
• a contract for
differences which derives its value from prices or indices of prices of
such underlying goods or activities, services, rights, interests and
events, as may be notified in consultation with the Forward Markets
Commission by the Central Government, but does not include securities.
|
F.4.2 |
Commodity Exchange |
49% |
Automatic |
F.4.3 |
Other conditions:
(i) FII/FPI purchases
shall be restricted to secondary market only.
(ii) No non-resident
investor/entity, including persons acting in concert, will hold more
than 5% of the equity in these companies.
(iii) Foreign
investment in commodity exchanges will be subject to the guidelines of
the Central Government / Forward Markets Commission (FMC) from time to
time.
|
F.5 |
Credit Information Companies (CIC) |
|
|
F.5.1 |
Credit Information Companies |
74% |
Automatic |
F.5.2 |
Other Conditions:
(1) Foreign
investment in Credit Information Companies is subject to the Credit
Information Companies (Regulation) Act, 2005.
(2) Foreign
investment is permitted subject to regulatory clearance from RBI.
(3) Such FII/FPI
investment would be permitted subject to the conditions that:
(a) A single entity
should directly or indirectly hold below 10% equity;
(b) Any acquisition in excess of 1 % will have to be reported to RBI as
a mandatory requirement; and
(c) FIIs investing in CICs shall not seek a representation on the Board
of Directors based upon their shareholding.
|
F.6 |
Infrastructure Company in the Securities Market |
|
|
F.6.1 |
Infrastructure companies in Securities Markets, namely, stock exchanges,
depositories and clearing corporations, in compliance with SEBI
Regulations |
49% |
Automatic |
F.6.2 |
Other Conditions: |
|
|
F.6.2.1 |
FII/FPI can invest only through purchases in the secondary market |
|
|
F.7. |
Insurance |
|
|
F.7.1 |
Insurance
(i) Insurance Company
(ii) Insurance Brokers
(iii) Third Party Administrators
(iv) Surveyors and Loss Assessors
(v) Other Insurance Intermediaries appointed under the provisions of
Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) |
49% |
Automatic upto 26%,; Government route beyond 26% and upto 49% |
F.7.2 |
Other Conditions:
(a) No Indian
insurance company shall allow the aggregate holdings by way of total
foreign investment in its equity shares by foreign investors, including
portfolio investors, to exceed forty-nine percent of the paid up equity
capital of such Indian insurance company.
(b) Foreign direct
investment proposals which take the total foreign investment in the
Indian insurance company above 26 percent and up to the cap of 49
percent shall be under Government route.
(c) Foreign
investment in the sector is subject to compliance of the provisions of
the Insurance Act, 1938 and the condition that Companies bringing in FDI
shall obtain necessary license from the Insurance Regulatory &
Development Authority of India for undertaking insurance activities.
(d) An Indian
insurance company shall ensure that its ownership and control remains at
all times in the hands of resident Indian entities referred to in
Notification No.G.S.R 115 (E), dated 19th February, 2015.
(e) Foreign portfolio
investment in an Indian insurance company shall be governed by the
provisions contained in sub-regulations (2), (2A), (3) and (8) of
regulation 5 of FEMA Regulations, 2000 and provisions of the Securities
and Exchange Board of India (Foreign Portfolio Investors) Regulations.
(f) Any increase of
foreign investment of an Indian insurance company shall be in accordance
with the pricing guidelines specified by Reserve Bank of India under the
FEMA.
(g) The foreign
equity investment cap of 49 percent shall apply on the same terms as
above to Insurance Brokers, Third Party Administrators, Surveyors and
Loss Assessors and Other Insurance Intermediaries appointed under the
provisions of the Insurance Regulatory and Development Authority
Act,1999 (41 of 1999).
(h) Provided that
where an entity like a bank, whose primary business is outside the
insurance area, is allowed by the Insurance Regulatory and Development
Authority of India to function as an insurance intermediary, the foreign
equity investment caps applicable in that sector shall continue to
apply, subject to the condition that the revenues of such entities from
their primary (i.e. non-insurance related) business must remain above 50
percent of their total revenues in any financial year.
(i) The provisions of
paragraphs F.2.2 (3) (i) (c) & (e), relating to ‘Banking-Private
Sector’, shall be applicable in respect of bank promoted insurance
companies.
(j) Terms ‘Control’,
‘Equity Share Capital’, ‘Foreign Direct Investment’ (FDI), ‘Foreign
Investors’, ‘Foreign Portfolio Investment’, ‘Indian Insurance Company’,
‘Indian Company’, ‘Indian Control of an Indian Insurance Company’,
‘Indian Ownership’, ‘Non-resident Entity’, ‘Public Financial
Institution’, ‘Resident Indian Citizen’, ‘Total Foreign Investment’ will
have the same meaning as provided in Notification No. G.S.R 115 (E),
dated 19th February, 2015.
|
F.8. |
Non-Banking Finance Companies (NBFCs) |
|
|
F.8.1 |
Foreign investment in NBFC is allowed under the automatic route in only
the following activities:
- Merchant Banking
- Underwriting
- Portfolio Management Services
- Investment Advisory Services
- Financial Consultancy
- Stock Broking
- Asset Management
- Venture Capital
- Custodian Services
- Factoring
- Credit Rating Agencies
- Leasing & Finance
- Housing Finance
- Forex Broking
- Credit Card Business
- Money Changing Business
- Micro Credit
- Rural Credit
|
100% |
Automatic |
F.8.2 |
Other Conditions |
|
|
|
(1) Investment would
be subject to the following minimum capitalisation norms:
(i) US $0.5 million
for foreign capital up to 51 % to be brought upfront.
(ii) US $ 5 million
for foreign capital more than 51 % and up to 75% to be brought upfront.
(iii) US $ 50 million
for foreign capital more than 75% out of which US $ 7.5 million to be
brought upfront and the balance in 24 months.
(iv) NBFCs (i) having
foreign investment more than 75% and up to 100%, and (ii) with a minimum
capitalisation of US$ 50 million, can set up step down subsidiaries for
specific NBFC activities, without any restriction on the number of
operating subsidiaries and without bringing in additional capital. The
minimum capitalization condition as mandated by para 3.10.4.1 of DIPP
Circular 1 on Consolidated FDI Policy, therefore, shall not apply to
downstream subsidiaries.
(v) Joint Venture
operating NBFCs that have 75% or less than 75% foreign investment can
also set up subsidiaries for undertaking other NBFC activities, subject
to the subsidiaries also complying with the applicable minimum
capitalisation norm mentioned in (i), (ii) and (iii) above and (vi)
below.
(vi) Non-Fund based
activities: US$ 0.5 million to be brought upfront for all permitted
non-fund based NBFCs irrespective of the level of foreign investment
subject to the following condition:
It would not be
permissible for such a company to set up any subsidiary for any other
activity, nor it can participate in any equity of an NBFC
holding/operating company.
Note: The following activities would be classified as Non-Fund
Based activities:
(a) Investment
Advisory Services
(b) Financial Consultancy
(c) Forex Broking
(d) Money Changing Business
(e) Credit Rating Agencies
(vii) This will be subject to compliance with the guidelines of RBI.
Note: (i) Credit Card
business includes issuance, sales, marketing & design of various payment
products such as credit cards, charge cards, debit cards, stored value
cards, smart card, value added cards etc.
(ii) Leasing &
Finance covers only financial leases and not operating leases.
FDI in operating
leases is permitted up to 100 % on the automatic route.
(2) The NBFC will
have to comply with the guidelines of the relevant regulator/s, as
applicable.
|
F.8.3 |
White Label ATM
Operations
|
100%
|
Automatic
|
|
Other Conditions:
i. Any non-bank
entity intending to set up a WLAs should have a minimum net worth of Rs.
100 crore as per the latest financial year’s audited balance sheet,
which is to be maintained at all times.
ii. In case the
entity is also engaged in any other 18 NBFC activities, then the foreign
investment in the company setting up WLA, shall have to comply with the
minimum capitalisation norms for foreign investment in NBFC activities,
as provided in para F.8.2.
iii. FDI in the WLAO
will be subject to the specific criteria and guidelines issued by RBI
vide Circular No. DPSS,CO.PD.No.2298/02.10.002/2011-12, as amended from
time to time.
|
F.9 |
Power Exchanges
|
|
|
F.9.1 |
Power Exchanges under the Central Electricity Regulatory Commission
(Power Market) Regulations, 2010 |
49% |
Automatic |
F.9.2 |
Other conditions |
|
|
|
(i) FII purchases
shall be restricted to secondary market only;
(ii) No non-resident
investor/entity, including persons acting in concert, will hold more
than 5% of the equity in these companies; and
(iii) The foreign
investment would be in compliance with SEBI Regulations; other
applicable laws/regulations; security and other conditionalities.
|
|
|
F.10 |
Pension Sector |
49% |
Automatic up to 26%; Government route beyond 26% and up to 49 % |
16. |
Pharmaceuticals |
|
|
16.1 |
Greenfield |
100% |
Automatic |
16.2 |
Brown Field |
100% |
Government |
16.3 |
Other Conditions |
|
(i) ‘Non-compete’
clause would not be allowed except in special circumstances with the
approval of the Foreign Investment Promotion Board.
(ii) The prospective
investor and the prospective investee are required to provide a
certificate along with the FIPB application.
(iiii) Government may
incorporate appropriate conditions for FDI in brownfield cases, at the
time of granting approval.
Note :
i. FDI upto 100%
under the automatic route is permitted for manufacturing of medical
devices. The abovementioned conditions will, therefore, not be
applicable to greenfield as well as brownfield projects of this
industry.
ii. Medical device
means :-
a) Any instrument,
apparatus, appliance, implant, material or other article, whether used
alone or in combination, including the software, intended by its
manufacturer to be used specially for human beings or animals for one or
more of the specific purposes of :-
(aa) Diagnosis,
prevention, monitoring, treatment or alleviation of any disease or
disorder;
(ab) diagnosis,
monitoring, treatment, alleviation of, or assistance for, any injury or
handicap;
(ac) investigation,
replacement or modification or support of the anatomy or of a
physiological process;
(ad) supporting or
sustaining life;
(ae) disinfection of
medical devices;
(af) control of
conception;
and which does not achieve its primary intended action in or on the
human body or animals by any pharmacological or immunological or
metabolic means, but which may be assisted in its intended function by
such means;
b) an accessory to
such an instrument, apparatus, appliance, material or other article;
c) a device which is
reagent, reagent product, calibrator, control material, kit, instrument,
apparatus, equipment or system whether used alone or in combination
thereof intended to be used for examination and providing information
for medical or diagnostic purposes by means of in vitro examination of
specimens derived from the human body or animals.
iii. The definition
of medical device at Note (ii) above would be subject to the amendment
in Drugs and Cosmetics Act.
|
17 |
Railway Infrastructure
|
|
|
|
Construction,
operation and maintenance of the following:
(i) Suburban corridor projects through PPP, (ii) speed train projects,
(iii) Dedicated freight lines, (iv) Rolling stock including train sets,
and locomotives/coaches manufacturing and maintenance facilities, (v)
Railway Electrification, (vi) Signaling systems, (vii) Freight
terminals, (viii) Passenger terminals, (ix) Infrastructure in industrial
park pertaining to railway line/sidings including electrified railway
lines and connectivities to main railway line and (x) Mass Rapid
Transport Systems.
|
100%
|
Automatic
|
|
Note:-
(i) Foreign Direct
Investment in the abovementioned activities open to private
participation including FDI is subject to sectoral guidelines of
Ministry of Railways.
(ii) Proposals
involving FDI beyond 49% in sensitive areas from security point of view,
will be brought by the Ministry of Railways before the Cabinet Committee
on Security (CCS) for consideration on a case to case basis.
|
3. Saving
Any existing foreign investment already made in accordance with the policy in
existence would not require any modifications to confirm to these amendments.
(B. P. Kanungo)
Principal Chief General Manager
Foot Note:-
The Principal Regulations were published in the Official Gazette vide G.S.R.
No.406 (E) dated May 8, 2000 in Part II, Section 3, sub-Section (i) and
subsequently amended as under:-
G.S.R.No. 158(E) dated 02.03.2001
G.S.R.No. 175(E) dated 13.03.2001
G.S.R.No. 182(E) dated 14.03.2001
G.S.R.No. 4(E) dated 02.01.2002
G.S.R.No. 574(E) dated 19.08.2002
G.S.R.No. 223(E) dated 18.03.2003
G.S.R.No. 225(E) dated 18.03.2003
G.S.R.No. 558(E) dated 22.07.2003
G.S.R.No. 835(E) dated 23.10.2003
G.S.R.No. 899(E) dated 22.11.2003
G.S.R.No. 12(E) dated 07.01.2004
G.S.R.No. 278(E) dated 23.04.2004
G.S.R.No. 454(E) dated 16.07.2004
G.S.R.No. 625(E) dated 21.09.2004
G.S.R.No. 799(E) dated 08.12.2004
G.S.R.No. 201(E) dated 01.04.2005
G.S.R.No. 202(E) dated 01.04.2005
G.S.R.No. 504(E) dated 25.07.2005
G.S.R.No. 505(E) dated 25.07.2005
G.S.R.No. 513(E) dated 29.07.2005
G.S.R.No. 738(E) dated 22.12.2005
G.S.R.No. 29(E) dated 19.01.2006
G.S.R.No. 413(E) dated 11.07.2006
G.S.R.No. 712(E) dated 14.11.2007
G.S.R.No. 713(E) dated 14.11.2007
G.S.R.No. 737(E) dated 29.11.2007
G.S.R.No. 575(E) dated 05.08.2008
G.S.R.No. 896(E) dated 30.12.2008
G.S.R.No. 851(E) dated 01.12.2009
G.S.R.No. 341 (E) dated 21.04.2010
G.S.R.No. 821 (E) dated 10.11.2012
G.S.R.No. 606(E) dated 03.08.2012
G.S.R.No. 795(E) dated 30.10.2012
G.S.R.No. 796(E) dated 30.10.2012
G.S.R. No. 797(E) dated 30.10.2012
G.S.R.No. 945 (E) dated 31.12.2012
G.S.R. No.946(E) dated 31.12.2012
G.S.R. No.38(E) dated 22.01.2013
G.S.R.No.515(E) dated 30.07.2013
G.S.R.No.532(E) dated 05.08.2013
G.S.R. No.341(E) dated 28.05.2013
G.S.R.No.344(E) dated 29.05.2013
G.S.R. No.195(E) dated 01.04.2013
G.S.R.No.393(E) dated 21.06.2013
G.S.R.No.591(E) dated 04.09.2013
G.S.R.No.596(E) dated 06.09.2013
G.S.R.No.597(E) dated 06.09.2013
G.S.R.No.681(E) dated 11.10.2013
G.S.R.No.682(E) dated 11.10.2013
G.S.R. No.818(E) dated 31.12.2013
G.S.R. No.805(E) dated 30.12.2013
G.S.R.No.683(E) dated 11.10.2013
G.S.R.No.189(E) dated 19.03.2014
G.S.R.No.190(E) dated 19.03.2014
G.S.R.No.270(E) dated 07.04.2014
G.S.R.No. 361 (E) dated 27.05.2014
G.S.R.No.370(E) dated 30.05.2014
G.S.R.No.371(E) dated 30.05.2014
G.S.R.No. 435 (E) dated 08.07.2014
G.S.R.No. 400 (E) dated 12.06.2014
G.S.R.No. 436 (E) dated 08.07.2014
G.S.R.No. 487 (E) dated 11.07.2014
G.S.R.No. 632 (E) dated 02.09.2014
G.S.R.No. 798 (E) dated 13.11.2014
G.S.R.No. 799 (E) dated 13.11.2014
G.S.R.No. 800 (E) dated 13.11.2014
G.S.R.No. 829 (E) dated 21.11.2014
G.S.R.No. 906(E) dated 22.12.2014
G.S.R.No. 914 (E) dated 24.12.2014
G.S.R.No. 30 (E) dated 14.01.2015
G.S.R.No. 183 (E) dated 12.03.2015
G.S.R.No. 284 (E) dated 13.04.2015
G.S.R.No. 484 (E) dated 11.06.2015
G.S.R.No. 745 (E) dated 30.09.2015
G.S.R.No. 759 (E) dated 06.10.2015
Published in the Official Gazette of Government of India – Extraordinary –
Part-II, Section 3,
Sub-Section (i) dated 30.10.2015- G.S.R.No.823(E)
|