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• The FDI policy is issued under the exeuctive authority of the Government.

The FDI policy is liberal, transparent and investor friendly where in FDI upto 100% is allowed under automatic route in all sectors/activities except the following: • Activities that attract industrial licensing • Industries retained under compulsory licensing • Manufacture of items reserved for small scale sector by non-SSI units • When the proposed location attracts locational restrictions. • Proposals where provisions of the Press Note No.1 of 2005 Series (having existing joint venture in same field) are attracted. • Proposals for acquisitionof shares in an existing Indian Company in the financial sector.

FOREIGN DIRECT INVESTMENT [FDI] POLICY the FDI policy is issued under the exeuctive authority of the Government.This has also been modified under the FEMA, which provide statutory cover.The FDI policy is liberal, transparent and investor friendly where in FDI upto 100% is allowed under automatic route in all sectors/activities except the following:
• • • • • •

Activities that attract industrial licensing: Industries retained under compulsory licensing; Manufacture of items reserved for small scale sector by non-SSI units; and When the proposed location attracts locational restrictions. Proposals where provisions of the Press Note No.1 of 2005 Series (having existing joint venture in same field) are attracted. Proposals for acquisitionof shares in an existing Indian Company in the:

. Some of the salient features are: •There are two modalities for FDI approval: Automatic route and the Foreign Investment Promotion Board (FIPB)/Government approval route. . •Full repatriation of original investment and returns is generally allowed.setting up Greenfield airport projects. .Those activities where the automatic route is not available under the notified sectoral policy. particularly in the core and infrastructure sectors. FDI for all items/activities can be brought in through the automatic route under powers delegated to the Reserve Bank of India (RBI).manufacture of industrial explosives. The Government policy on FDI since 1991 has aimed at encouraging foreign investment. and for the remaining items/activities through Government approval. etc. FDI up to 100%. •Comprehensive guidelines for the consideration of FDI proposals by FIPB have been notified to ensure greater transparency to decision making. as per sector specific policy for FDI. simultaneous measures have also been introduced to ensure a level playing field to the domestic industry. . . RATIONALIZATION OF THE FDI POLICY • • The policy on Foreign Direct Investment (FDI) has been reviewed on a continuing basis and several measures announced from time to time for rationalization/ liberalization of the policy and simplification of procedures. •The Government has.frame of 30days.manufacturing activities located within 25kms of the standard Urban area limits which require Industrial license under the Industrial (Development& Regulation) Act.manufacture of hazardous chemicals. •All items/activities . ports and harbours.distillation& brewing of potable alcohol.While foreign investment is welcomed in a wide range of activities.. •where SEBI takeover code is attracted. except where the existing and notified sectoral policy does not permit FDI beyond a ceiling. for: . Government of India has recently further reviewed the policy on FDI and decided as under: To allow under the automatic route.financial sector. except a small negative list. roads& highways. allowing foreign investment in new activities such as Global Mobile Personal Communication System and bringing FDI up to 100 per cent in power sector. Foreign direct investment is freely allowed in all sectors including the services sector. Government has taken a series of steps to ensure a liberal FDI policy. •The remaining activities require approval of FIPB/Government. inter-alia.Government approvals are accorded on the recommendation of the Foreign Investment Promotion Board (FIPB). Virtually. FIPB endeavours to dispose of applications for FDI within a time. vehicular tunnels and vehicular bridges. quality for automatic approval. under the automatic route. 1951.. taken steps to simplify foreign investment procedures. .cash & carry wholesale trading and export trading.

and • Exploration and mining of diamonds & precious stones.• To increase FDI caps to 100% and permit it under the automatic route for : • Coal & lignite mining for captive consumption . Processing and warehousing of coffee and rubber. . • Setting up infrastructure relating to marketing in Petroleum & Natural Gas sector. Policy on foreign direct investment (FDI) • Sectors prohibited for FDI • Retail trading (except single brand product retailing) • Atomic energy • Lottery business • Gambling and betting. 2003. To allow FDI up to 100% under the automatic route in : • • Power trading subject to compliance with regulations under the Electricity Act.