FDI Limit in the Different Sectors of the Indian Economy

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About Foreign Direct Investment (FDI)

A Foreign Direct Investment (FDI) is an investment in by foreign investors in the foreign based company. Mainly there are two types of FDI, one is Green Field Investment i.e. a fresh company is established in a foreign country and the other is Portfolio Investment i.e. shares of a foreign company are purchased or ownership acquired in a foreign company.

Two ways to get investment approval in India: 

  1. Getting approval from the automatic route or the RBI route; FDI under the automatic route does not require prior approval either by the government of India or by the Reserve Bank of India.
  2. Government route also known as FIPB route; FDI approval through the government route is given by the Foreign Investment Promotion Board (FIPB).

Sectors which are prohibited for FDI: Image result for FDI inflows in 2017

  1. Business of chit fund;
  2. Manufacturing of cigfars, cheroots, cigarillos and cigarettes, tobacco or its substitutes;
  3. Railways Operation;
  4. Lottery Businesses;
  5. Betting & Gambling;
  6. Nidhi Company;
  7. Trading in transferable development rights (TDRs); and
  8. Activities/sectors not open to private sector investment e.g. Atomic Energy and Railway operations (other than permitted activities)
  9. Real Estate Business or Construction of Farm Houses (Real estate business does not include development of townships, construction of residential /commercial premises, roads or bridges).

Top 10 Countries Investing in India

Image result for fdi inflows in india 2017

Sectorwise FDI Limits

SectorFDI LimitEntry Route & Remarks
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), Pisciculture, Aquaculture
• Services related to agro and allied sectors
100%Automatic
Plantation Sector
• Tea sector including tea plantations
• Coffee plantations
• Rubber plantations
• Cardamom plantations
• Palm oil tree plantations
• Olive oil tree plantations
100%Automatic
Mining
Mining and Exploration of metal and non-metal ores including diamond, gold, silver and precious ores but excluding titanium bearing minerals and its ores
100%Automatic
Mining (Coal & Lignite)100%Automatic
Mining
Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities
100%Government
Petroleum & Natural Gas
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 etc
100%Automatic
Petroleum & Natural Gas
Petroleum refining by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs.
49%Automatic
Defence Manufacturing100%Automatic up to 49%
Above 49% under Government route in cases resulting in access to modern technology in the country
Broadcasting
• 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 upgradation of networks towards digitalization and addressability
• Mobile TV
• Head end-in-the Sky Broadcasting Service(HITS)
100%Automatic
Broadcasting
Cable Networks (Other MSOs not undertaking up gradation of networks towards digitalization and addressability and Local Cable Operators (LCOs))
100%Automatic
Broadcasting Content Services
• Terrestrial Broadcasting FM(FM Radio)
• Up-linking of ‘News & Current Affairs’ TV Channels
49%Government
Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels100%Automatic
Print Media
• Publishing of newspaper and periodicals dealing with news and current affairs
• Publication of Indian editions of foreign magazines dealing with news and current affairs
26%Government
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
Publication of facsimile edition of foreign newspapers100%Government
Civil Aviation – Airports
Green Field Projects & Existing Projects
100%Automatic
Civil Aviation – Air Transport Services
• Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline
• Regional Air Transport Service

(Foreign Airlines are barred from Investing in Air India)

100%Automatic up to 49%
Above 49% under Government route
100% Automatic for NRIs
Civil Aviation
• Non-Scheduled Air Transport Service
• Helicopter services/seaplane services requiring DGCA approval
• Ground Handling Services subject to sectoral regulations and security clearance
• Maintenance and Repair organizations; flying training institutes; and technical training institutions
100%Automatic
Construction Development: Townships, Housing, Built-up Infrastructure100%Automatic
Industrial Parks (new & existing)100%Automatic
Satellites- establishment and operation, subject to the sectoral guidelines of Department of Space/ISRO100%Government
Private Security Agencies74%Automatic up to 49%
Above 49% & up to 74% under Government route
Telecom Services100%Automatic up to 49%
Above 49% under Government route
Cash & Carry Wholesale Trading100%Automatic
E-commerce activities (e-commerce entities would engage only in Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce.)100%Automatic
Single Brand retail trading
Local sourcing norms will be relaxed up to three years and a relaxed sourcing regime for another five years for entities undertaking Single Brand Retail Trading of products having ‘state-of-art’ and ‘cutting edge’ technology.
100%Automatic up to 49%
Above 49% under Government route
Multi Brand Retail Trading51%Government
Duty Free Shops100%Automatic
Railway Infrastructure
Construction, operation and maintenance of the following
• Suburban corridor projects through PPP
• High speed train projects
• Dedicated freight lines
• Rolling stock including train sets, and locomotives/coaches manufacturing and maintenance facilities
• Railway Electrification
• Signaling systems
• Freight terminals
• Passenger terminals
• Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivities to main railway line
• Mass Rapid Transport Systems.
100%Automatic
Asset Reconstruction Companies100%Automatic
Banking- Private Sector74%Automatic up to 49%
Above 49% & up to 74% under Government route
Banking- Public Sector20%Government
Credit Information Companies (CIC)100%Automatic
Infrastructure Company in the Securities Market49%Automatic
Insurance
• Insurance Company
• Insurance Brokers
• Third Party Administrators
• Surveyors and Loss Assessors
• Other Insurance Intermediaries
49%Automatic
Pension Sector49%Automatic
Power Exchanges49%Automatic
White Label ATM Operations100%Automatic
Financial services activities regulated by RBI, SEBI, IRDA or any other regulator100%Automatic
Pharmaceuticals(Green Field)100%Automatic
Pharmaceuticals(Brown Field)100%Automatic up to 74%
Above 74% under
Government route
Food products manufactured or produced in India
Trading, including through e-commerce, in respect of food products manufactured or produced in India.
100%Government
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