Latest News and Policy Trends with respect to FDI in INDIA

Overview FDI is a category of cross border investment made by a resident in one economy (the direct investor) with the objective of establishing a lasting interest in an enterprise (the direct investment enterprise) i.e. resident in an economy other than that of the direct investor. The motivation of the direct investor is a strategic long term relationship with the direct investment enterprise to ensure the significant degree of influence by the direct investor in the management of the direct investment enterprise. The objectives of the direct investment are different from those of portfolio investment whereby investors do not generally expect to influence the management of the enterprise. The FDI in India is undertaken in accordance with the FDI Policy which is formulated and announced by the Government of India. The Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Industry (MCI), Government of India issues a Consolidated FDI Policy on an yearly basis on March 31 of each year (since 2010) elaborating the policy and the process in respect of FDI Policy governed by the provisions of the Foreign Exchange Management Act.(FEMA),1999. FEMA Regulations which prescribe amongst other things the mode of investments i.e. issue or acquisition of shares/convertible debentures & preference shares, manner of receipt of funds, pricing guidelines and reporting of the investments to the Reserve Bank. Procedure for receiving FDI in an Indian Company An Indian Company may receive FDI under the two routes as given under: i) Automatic Route FDI is allowed under the automatic route without prior approval either of the Government or RBI in all activities/sectors as specified in the consolidated FDI Policy, issued by the Government of India from time to time. Government Route FDI in activities/sectors not covered under the automatic route requires prior approvalof the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic affairs, Ministry of Finance. The Indian company having received FDI either under the Automatic route or Government route is required to comply with provisions of the FDI Policy including reporting the Foreign Direct Investment to RBI.

ii)

FDI is prohibited in the following activities/sectors: Atomic Energy Lottery Business including Govt./private lottery Gambling & Betting including Casinos etc. Business of Chit Fund Nidhi Company Trading in Transferable Development Rights (TDR s) Real Estate Business or Construction of Farm Houses Activities /sectors not opened to private sector investment

FDI is allowed in following activities/sectors: Animal Husbandry Floriculture Aquaculture Development of seeds Vegetable & Mushrooms Tea Plantation Mining Manufacture of items reserved for production in MSEs. Defence Electric Generation Civil Aviation Sector Asset Reconstruction Companies Banking-Private Sector Banking Public Sector Terrestrial Broadcasting Cable network DTH HITS Setting up hardware facilities such as up-linking, HUB Commodity Exchange Development of Township, Housing, Built-up infrastructure & construction-development projects. Credit Information Companies(CIC) Industrial Parks both setting up & in established industrial parks. Insurance Infrastructure Company in the Securities Market

Sectoral Details

Summary of FDI in Retail

India has current account deficit that came in at an all-time high 4.8% of GDP for 2012-13. Top officials met on July 1 to firm up a plan, initiated by the finance ministry, to bring about major relaxations in the foreign direct investment (FDI) limit in many sectors.

Jul 10, 2013Government's plan to raise sectoral FDI caps faces opposition from ministries and departments, including those of defence and civil aviation. Concerns have also been raised by the ministry of micro, small and medium enterprises (MSME) about the easing of sourcing norms in multi-brand retail trade. "There isn't much difference between 51% and 74%, however, we do not want the 30% mandatory sourcing from small enterprises to be relaxed," an MSME official said. "If they do not source 30% from Indian MSMEs, foreign retailers would rather source from China's MSMEs, especially electronic items," he added.

Manmohan Singh to met Cabinet colleagues on crucial FDI issues on Jul 16, 2013 The Mayaram committee has recommended at least 49% FDI in most sectors through the automatic route and higher FDI limit in many sectors such as multi-brand retail, telecom, and civil aviation in a bid to attract stable foreign inflows as CAD touched an all-time high of 4.8% of GDP last fiscal.

Jul 17, 2013,The government has relaxed norms for single-brand retail by allowing automatic approval for foreign investments up to 49%, but its approval would still be needed for investment over 49% to 100%. Unlike the multi-brand sector, lot of singlebrand retailers has shown interest in setting up operations in India. On July 21, 2013 Department of Industrial Policy and Promotion circulates Cabinet draft note on easing retail FDI norms With a view to accommodating some demands

of global retailers such as Walmart and Tesco, DIPP has circulated the draft of a Cabinet note seeking views of different ministries to ease FDI norms in multi-brand segment. As per the current FDI policy, foreign retailers are allowed to open stores only in cities with a million-or-over population. The conditions have been relaxed for hilly states such as Jammu and Kashmir and Assam. As per the policy, 30 per cent of products sold by single brand retailers, where 100 per FDI is allowed, are to be preferably sourced from small and medium enterprises (SMEs). On the other hand, in multi-brand segment, it is mandatory for the company to procure 30 per cent from SMEs. Although the government has permitted 51 per cent FDI in multi-brand retail about nine months back, no formal proposal has been received by the DIPP yet. FDI in retail: Govt likely to dilute local sourcing & single-brand guidelines for foreign retailers Jul 23, 2013 NEW DELHI: The government plans to dilute local sourcing norms and investment guidelines for foreign retailers as well as give states the freedom to relax the minimum 10 lakh population threshold, as it makes yet another attempt to woo global retail chains. According to a cabinet note prepared by the Department of Industrial Policy and Promotion (DIPP), the stipulation that foreign multi-brand retailers must purchase 30% of what they sell in India from small vendors will remain.

Parliament panel seeks regulator for FDI in multi-brand retail Jul 23, 2013, Cautioning that the entry of foreign retail giants could create joblessness, a Parliamentary panel today asked the government to set up a 'Retail Regulatory Authority' to deal with issues concerning foreign multi-brand retail companies in the country.

Finance ministry, DIPP differ over key retail issues Aug 1, 2013 Differences of opinion have cropped up between the finance ministry and the department of industrial policy and promotion (DIPP) over foreign direct investment in multi-brand retail with the former batting for a more liberalized regime. DIPP has disagreed with the finance ministry's proposal that foreign retailers should be left to decide whether or not to source from the medium and small enterprises. They also have different opinions on whether to include agricultural cooperatives as part of the sourcing clause. DIPP argues that if sourcing is made 'preferable' as suggested by the department of economic affairs (DEA) in stead of 'mandatory', foreign retailers might not at all source from MSMEs. "It would defeat the government's purpose of the policy being used as an instrument to strengthen MSMEs," DIPP has said, a person familiar with the developments told ET. The finance ministry's proposal was in line with the requests made by the world's leading retail giants Walmart, Carrefour and Tesco, who were believed to have expressed their inability to meet this mandatory sourcing requirement from small and medium enterprises. The finance ministry has also proposed allowing foreign retailers to buy out 'brown field' retail ventures. Referring to the current FDI rule, which requires a foreign investor to pump in at least $50 million towards backend infrastructure, DIPP has said, "The rationale for this conditionality was the acute need for augmenting back-end infrastructure in the country, primarily to reduce post-harvest losses". The DIPP is also not keen on allowing 49% FDI in multi-brand sector under the automatic route. "FDI in multi-brand retail trade up to 49% on the automatic route was also not included in the recommendations sent by finance ministry. Hence, this was not discussed in the meeting taken by the PM on July 16".

On Aug.1, Retailers welcome move to ease FDI norms in multi-brand retail

Future Group CEO Kishore Biyani said with the easing of FDI norms and clarity over definition of "control", domestic companies can start engaging with overseas companies for partnerships. "The clarification given by the government on the 'control' definition that one can invest in the downstream companies provided that the management is Indian will allow retailers like us, Future Group, to see some transactions," he said.

CAIT opposes decision to ease norms for FDI in multi-brand

Aug 2, 2013

Traders were not consulted before easing norms for Foreign Direct Investment (FDI) in multi-brand retail, apex traders' body CAIT The Confederation of All India Traders said today. "...without consulting any stakeholder or political fraternity, government has issued its diktat to handover retail trade of India to global retailers at the cost of more than 5 crore business establishments in unorganized sector," CAIT Secretary General Praveen Khandelwal said. Future Retail, Trent, Shopper's Stop gain as govt eases FDI rules
Aug 2, 2013

MUMBAI: Shares in retailers gained on Friday after the government relaxed foreign investment rules in the sector, raising hopes it would spur overseas interest in domestic chains. The government eased investment rules for the retail sector on Thursday, allowing foreign supermarket operators to procure from small businesses which have invested no more than the equivalent of $2 million in plant and machinery, Trade Minister Anand Sharma told reporters. Future Retail Ltd was up 9.36 percent, Trent Ltd was up 1.7 percent while Shopper's Stop Ltd gained 1.4 percent.

Foreign Direct Investment (FDI) funded retailers will be allowed to operate stores only in those states that have agreed to allow foreign investments in retail. And Gujarat is not one of them. A recent report of Crisil Research has come with a list of potential cities where foreign retailers can operate. The list includes 10 states and two union territories Delhi, Maharashtra, Andhra Pradesh, Assam, Rajasthan, Uttarakhand, Haryana, Manipur, J&K, Himachal Pradesh, Daman & Diu and Dadra & Nagar Haveli.

The report says that Gujarat, Madhya Pradesh, Tamil Nadu and others havent yet give green signal to FDI in retail. As per Centres policy and approval from state governments, 21 cities in India have potential of getting foreign retailers. Cities with population of more than one million are applicable for retail FDI but not one city of Gujarat has been included in the list.

India must attract more FDI Aug 12, 2013 The cabinet has recently approved proposals raising FDI caps in several sectors and permitting higher limits in others after approval from the Foreign. More sectors were brought in under the automatic route which requires only notification to the RBI. The enactment of a contemporary Companies Bill would also attract FDI.
In single-brand retail, 49% FDI has been permitted under the automatic route. This should be accompanied by clarity on the status of sub-brands of the investing company.

In multi-brand retail, the concerns of foreign investors regarding mandatory sourcing from small and medium enterprises, investment in back-end infrastructure, restriction on buying out existing retailers, and others have deterred inward investments. The decisions on SME sourcing and infrastructure investment should add comfort to overseas investors and bring in new funds in the sector.

'18 single brand retail FDI proposals approved till May, 2013'
Aug 20, 2013,

NEW DELHI: The government approved a total of 18 foreign direct investment proposals worth USD 173 million in the single brand retail sector between April 2010 and May 2013, Parliament was informed today. Of these, it approved five proposals in the sector worth USD 137.68 million during the first two months of the current fiscal. Firms which have received approvals to open retail stores under the single-brand retail policy include fashion brand Promod, France-based crockery maker Le Creuset, accessories firm Fossil Inc and French sports giant Decathlon. During April 2010 and May 2013, India also attracted FDI worth USD 256.7 million in agriculture services, Commerce and Industry Minister Anand Sharma said in a written reply to Lok Sabha. In January 2012, India had raised FDI cap in single-brand retail to 100 per cent from 51 per cent. In reply to another question, Sharma said there is no proposal to amend FDI policy in real estate business. "As per extant FDI policy, FDI is not permitted in real estate business. There is no proposal under consideration to amend the said policy.

FDI in Defence Summary India will raise FDI in defence sector: Anand Sharma
Jul 6, 2013

Commerce and Industry minister Anand Sharma has expressed confidence that India will raise the limit for Foreign Direct Investment (FDI) in the defence sector, indicating that defence minister AK Antony's reservations are part of the wider discussion process in the government. One justification for the higher FDI limit is that it will encourage domestic production of many of the defence items that India imports, helping country save precious forex reserves and also generate jobs. The counter argument is that allowing higher stake to foreigners in strategic sectors will compromise security.

The DIPP, the administrative department for the FDI policy, has held formal consultations with all stakeholder ministries and departments on the Mayaram panel's recommendations. "In the long term, we cannot afford to be dependent on foreign companies... therefore, foreign direct investment cap in the defense manufacturing sector should remain at 26%," defence minister AK Antony had said in a letter to commerce and industry minister Anand Sharma.

Government's plan to raise sectoral FDI caps faces opposition from ministries
Jul 10

Reports say the defence ministry wants the foreign investment cap in the sector to remain at 26%. However, higher foreign direct investment could be considered the cabinet committee on security only on a "case-to-case basis" if it results in access to modern technology, it has said. FDI cap in defence retained at 26 per cent
Aug 1, 2013

NEW DELHI: FDI cap in defence sector will remain at 26 percent and proposals beyond that will be considered by the Cabinet Committee on Security (CCS) on case to case basis. The Union Cabinet, at a meeting chaired by Prime Minister Manmohan Singh here this evening, decided that FDI proposals in defence sector up to 26 per cent will continue to go through the Foreign Investment Promotion Board (FIPB) route.
This will apply to proposals to the tune of Rs 1200 crore with a cap of 26 per cent, Commerce Minister Anand Sharma told reporters after the Cabinet meeting. Any proposal beyond Rs 1200 crore, even if less than 26 per cent, will have to be cleared by the Cabinet, he said. "FDI cap is 26 percent in defence sector that stands like that. Proposals up to 26 per cent will be cleared by the Foreign Investment promotion Board (FIPB) route," Sharma said. He said proposals beyond 26 per cent would be cleared by the CCS for getting state-of-the-art technology in the military sector. Sources said the definition of state-of-the-art technology would be determined by the Defence Ministry.

FDI in Pharma Summary Government's plan to raise sectoral FDI caps faces opposition from ministries
Jul 10, 2013

The department of pharmaceuticals has firmed up its decision to oppose 49% FDI in brownfiled pharma projects through the automatic route, a person with knowledge of the development said.

Under current norms, 100% foreign direct investment is allowed in greenfield pharma projects through the automatic route and in brownfield projects through the foreign investment promotion board route. Manmohan Singh to meet Cabinet colleagues today on crucial FDI issues
Jul 16, 2013

DIPP has reservations on allowing 49% FDI through the automatic route in brownfield pharma light of the recent takeovers of India's rare facilities for vaccines and injectables. Commerce and industry minister Anand Sharma has written to the PM to review the FDI policy in pharma as FDI has neither led to increased R&D nor additional production facilities. Medical devices may skip stiff FDI norms, Government plans to create sub category within pharma sector
Aug 5, 2013

NEW DELHI: India is proposing to create a sub category within the pharmaceuticals industry consisting of medical equipment and devices such as implants and sutures that will not attract the stiff conditions on brownfield foreign investment in the sector. The department of industrial policy and promotion (DIPP) will soon move a note in consultation with the health ministry, department of pharmaceuticals and the finance ministrycreating a new category of medical devices under the FDIpolicy. "Medical field has seen many changes in the last 15 years but there is no separate category for medical devices...They get classified as pharmaceutical products and face same norms applicable for pharma," said a finance ministry official privy to the interministerial deliberations on the issue. India had opened the pharmaceutical sector to 100% FDI via the automatic route in 2002 but last year the government introduced a distinction between greenfield projects and brownfield ones following apprehensions that Indians will be denied cheap medicines if multinational continued to acquire big companies. Foreign direct investment in an existing pharmaceuticals company now requires permission from the foreign investment promotion board (FIPB). The government has also imposed conditions on brownfield investment such as mandatory manufacture of essential drugs and continued investment in research and development. Department of Industrial Policy and Promotion may seek FDI ban on critical drug units
Aug 16, 2013

NEW DELHI: The Department of Industrial Policy and Promotion (DIPP), backed by the health ministry, may pitch for barring foreign direct investment in existing rare and critical domestic drug making facilities, besides further tightening of norms in brownfield pharma sector.
A host of pharma brownfield proposals, including Mylan's over 9,000-crore investment in Agila Specialities, are awaiting clarity on the policy.

"DIPP may propose that future takeovers of rare and critical domestic drug making facilities such as oncology and injectables by multinationals be restricted, alongside mooting more stringent entry conditions for foreign pharma companies keen to acquire large Indian drug firms or a sizeable stake in a domestic drug firm," said a government official privy to the proposal. Sharma may also suggest that non-compete clauses, a standard practice in merger and acquisition deals, which restrict the promoters of target companies from venturing into the same business for a certain numbers of years, be kept out in case of brownfield pharma deals. The government may also impose conditions mandating additional investments in the manufacturing capacities of the acquired brownfield facility to ensure that foreign companies do not acquire Indian generic drug facilities just to shut them. Health ministry is likely to back DIPP's proposals. "We support DIPP's proposal to build checks in the existing brownfield pharma policy. We are particularly concerned about availability and affordability of injectables and cancer drugs here, many of which are not part of essential drug list," a health ministry official said. Last month, the health ministry had held inter-ministerial consultation with DIPP, finance ministry and public health experts to check whether the pharma FDI policy currently is at variance with public health goals. FDI policy in pharmaceuticals sector set for major overhaul Aug 16 & Aug. 20 (NEW DELHI: The government is set to make major changes in the current FDI policy in the pharmaceuticals sector to protect domestic generic industry in the wake of increasing acquisitions of homegrown companies by foreign players. After a high-level meeting held on Friday chaired by Prime Minister Manmohan Singh, it has been decided that the Commerce and Industry would soon start a consultation process to address "dangers inherent" in the current model of FDI in brownfield pharma units. He further said the proposals before the FIPB would go through the existing policy and if there were "safeguards required that will be discussed as what should be the nature of safeguards so that affordable life saving medicines are available to the people".

The changes to be brought will prospective in nature, the official said, adding the current policy was not serving its objectives and it needs to be changed in order to ensure affordable drugs to the general public. "Multi-national companies (MNCs) which are acquiring domestic firms have spent less than one per cent of their total sales in R&D in India. They are doing only clinical trials in India and not actual drug development work," the official added. As part of the proposed changes, the Health Ministry would be asked to suggest whether any specific critical verticals in the sector should be retained only with the Indian companies in case of M&As, the official said. Among the main concerns that were raised in the meeting is how to prevent MNCs from changing product mix from generics to branded generics or patented ones after acquiring Indian companies, which could impact the cheapest price generic for the Indian population. "Also, there is a concern that dominant MNCs can block small domestic companies from establishing their presence in the global market," a source said adding the government may look at reducing FDI cap from 100 per cent in the sector. Over 96 per cent of the total FDI in the sector between April 2012 and April 2013 has come into brownfield pharma. During April 2000 and May 2013, India has attracted FDI worth USD 11.31 billion, which is 6 per cent of the total foreign inflows. Sources said that there is a feeling in the government circle that with MNCs taking control of Indian firms, there could be reduction in supply of vaccines, injectables, particularly for cancer and active pharmaceutical ingredients. It had 'strongly' recommended the Commerce Department to take all measures to stop any further takeover or acquisition of domestic pharma units. Currently, India permits 100 per cent FDI in pharmaceutical sector through automatic approval route in the new projects but the foreign investment in the existing pharmaceutical companies are allowed only through FIPB's approval.

Summary of FDI in Telecom PM Manmohan Singh clears raft of FDI proposals but falls short of expectations

Jul 17, 2013

NEW DELHI: The government on Tuesday delivered on its promise to relax the foreign direct investment (FDI) regime, allowing 100% foreign ownership in the telecom sector and in defence on a case-by-case basis, but fell short of expectations raised by the Arvind Mayaram committee. The reforms, part of the government's efforts to attract stable capital flows to fund the record high current account deficit at 4.8% of GDP last year, will benefit the telecom sector the most, which has been stagnating over the last two years after the cancellation of 22 licences by the Supreme Court following the 2G scam. Multinationals like Vodafone could now acquire 100% ownership of their ventures and the upcoming telecom spectrum auctions could see a much higher level of interest. "RCOM strongly supports the government's decision to allow 100% FDI in the telecom sector. 100% FDI in telecom will enhance value for all stakeholders," a RCOM spokesperson said. Experts say it could attract close to $10 billion worth of investments in the long term. The sector has so far attracted FDI worth $13 billion since early 2000 100% FDI in telecom: Industry now wants M&A guidelines
Jul 17, 2013

NEW DELHI: Telecom analysts expect the government decision to fully open the sector to foreign direct investment (FDI) to attract $ 10 billion, but the industry wants to see merger and acquisition guidelines for the sector first. Some players, however, also feel hiking FDI limit from 74 per cent to 100 per cent in the telecom sector will not make much of a difference as foreign investors would continue to exercise control in more or less the same fashion as they did when the cap was 74 per cent. "100 per cent FDI in telecom is just the first page of a novel. The real future lies in mergers and acquisition norm that will clear the future of investments in the sector. Everyone will work out their investment strategy by looking at all the points and not just FDI perspective," an official of telecom firm, which is seen as a potential buyer, said. Industry experts believe foreign investors would prefer to buy out small telecom operators or companies that have been under-performing. "100 per cent FDI is expected to provide a much-needed boost to the sector and is likely to attract approximately $ 10 billion worth of investments in the near to long-term," Prashant Singhal, Partner in member firm of EY Global, said.

He further added that there is an expectation for further consolidation and buy-outs in the telecom space as cashed up foreign telecom companies may seek to buy out smaller players as the entry barriers will have significantly reduced. Also, foreign firms that have majority stake in Indian telecom companies may look at buying entire stake of their minority partners to have free hand in business decision making. A board member of a telco, which is controlled by foreign company said: "We do not have control in day to day business with minority stake but we would like stay invested in the company for good returns on investment. Question of exit will only arise if there is huge cash crunch." He further added that the policy is good for investment purposes but there will be security issues if complete ownership of the company goes to foreign hands. "Data that transacts in to telecom network is important. With 100 per cent FDI in telecom, it will be difficult for government to assess damage that a foreign operator can cause," he said. Cabinet approves 100% FDI in telecom
Aug 1, 2013 NEW DELHI: In a major reform push, government today approved 100 per cent foreign direct investment (FDI) in the telecom sector, meeting a key demand of the fund-starved industry. It has been decided to increase FDI cap in telecom to 100 per cent from 74, up to 49 through automatic route and beyond that FIPB, Commerce and Industry Minister Anand Sharma said after a meeting of the Union Cabinet. A presentation was made by Department of Industrial Policy and Promotion (DIPP) following consultations with the the nodal ministries involved, he said. The idea behind increasing the FDI limit in the telecom sector is to help the industry get fresh funds to lower financial burden. The moves brings relief for foreign partners in telecom companies as they can have complete ownership of the business. "Foreign investors will no longer need to partner with Indian investors in order to comply with regulatory requirements," PwC India's for Executive Director, Tax and Regulatory Services, Goldie Dhama said. In 2012, there have been disputes among foreign investors with their India partners in firms like Uninor andEtisalat DB. While Telenor resolved issues with its Indian partner Unitech in Uninor, Etisalat decided to quit the country. Telecom majors Reliance Communications, Russian conglomerate controlled Sistema controlled SSTL, Malaysian firm Maxis controlled Aircel, Norwegian firm Telenor welcomed the decision.

Industry analysts believe 100 per cent FDI in the telecom sector can attract investment of USD 10 billion in near to long term.

Foreign-controlled telecom companies cheer 100% FDI in sector

Aug 2, 2013

NEW DELHI: The Cabinet on Thursday approved 100%foreign direct investment (FDI) in the telecom sector, bringing cheers to foreign-controlled telecom companies which will now be able to buy out their minority Indian partners. However, industry experts warn that raising theFDI cap might not attract significant investments until the government introduces clear, industry-friendly policies in the sector, currently marred by regulatory hurdles. "There isn't any clarity on mergers and acquisition guidelines, nor a clear road map on spectrum refarming. One time spectrum charge is under litigation and despite New Telecom Policy 2012 proposing efficient use of spectrum, legality of 3G roaming pacts has been questioned," Hemant Joshi, Partner, Delloite Haskins & Sells, said listing some of reasons why raising the FDI cap might not be enough to attract investments. Even then, foreign-controlled telecom operators in the country welcomed the government's decision to hike the cap. Norwegian telecom operator Telenor, which operates telecom services in India under the brand Telewings, and the Russian telecom operator Sistema- controlled SSTL, have welcomed the move the past. According to the new rule, FDI up to 49% will be under automatic route while any equity infusion beyond this will need approval from Foreign Investment Promotion Board.

Telecom sector received Rs 58,782 crore FDI in last 13 years

Aug 18, 2013

 NEW DELHI: The country's telecom sector has received a cumulative foreign direct investment (FDI) of $12,865 million (Rs 58,782 crore) in the last 13 years, which comprises 7 per cent of the total FDI inflows. "The telecom sector has attracted FDI inflows of Rs 58,782 crore from April 2000 till May 2013," Minister of State for Communications and IT Milind Deora said. However, FDI in the sector, which includes radio paging, cellular mobile, basic telephone services, plunged 81.64 per cent in 2012-13 to Rs 1,654 crore mainly on account of economic slowdown and tough regulatoryenvironment in the country. As per the Department of Industrial Policy and Promotion (DIPP), the country has received Rs 9,012 crore as FDI inflows in 2011-12. Deora said with a view to provide clear road map and policy framework for the telecom sector, the government has already reviewed the telecom policies following a consultative process and announced the NTP 2012 in June 2012. "By formulating a clear policy regime, NTP-2012 endeavours to create an investor friendly environment for attracting additional investments in the sector and provides clear roadmap to address policy and regulatory issues to improve the health of the telecom sector," Deora said. The government has also approved 100 per cent FDI in the sector, meeting a key demand of the fundstarved industry. The idea behind increasing the FDI limit in the telecom sector was to help the industry get fresh funds to lower financial burden. "The enhancement of FDI cap is expected to facilitate capital inflows as well as ability of existing service providers to access lower cost financing," Deora added.