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FDI Industrywise Sectoral Caps

Sectoral Caps/Limits on Investments by Persons Resident Outside India or Foreign Companies for each Industry
S. No. 1. 2. Sector

Investment Description of Activity/Items/Conditions Cap Private Sector 49% Subject to guidelines issued by RBI Banking time to time Non-Banking 100% FDI/NRI investments allowed in the follo Financial Com19 NBFC activities shall be as per the le panies (NBFC) indicated below :

(a) Activities covered Merchant Bank Under Writing; Portfolio Managem Services; Investment Advisory Serv Financial Consultancy; Stock-broking; A Management; Venture Capital; Cust Services; Factoring; Credit Refer Agencies; Leasing & Finance; Hou Finance; Forex-broking; Credit Business; Money-changing Business; M credit; Rural credit.

(b) Minimum Capitalisation norms for based (NBFCs) (i) For FDI upto 51%, 0.5 million to be brought in upfront; ( the FDI is above 51% and upto 75%, US million to be brought upfront; (iii) If the is above 75% and upto 100%, US $ million out of which $ 7.5 million to brought in upfront and the balance in months.

(c) Minimum Capitalisation norms for fund based activities Minim Capitalisation norm of US $ 0.5 millio applicable in respect of non-fund b NBFCs with foreign investment.

(d) Foreign investors can set up 1 operating subsidiaries without the cond to disinvest a minimum of 25% of its eq to Indian entities, subject to bringing in 50 million as at (b) (iii) above (without restriction on number of opera subsidiaries without bringing in addit capital).

(e) Joint Venture Operating NBFCs that 75% or less than 75% foreign investm will also be allowed to set up subsidi for undertaking other NBFC activ subject to the subsidiaries also comp with the applicable minimum capital in i.e., (b)(i) and (b)(ii) above.

3.

Insurance

26%

4.

Telecommunications

49%

(f) FDI in the NBFC sector is put automatic route subject to compliance guidelines of the Reserve Bank of India. would issue appropriate guidelines in regard. FDI upto 26% in the Insurance secto allowed on the automatic route subjec obtaining licence from Insurance Regula and Development Authority (IRDA) (i) In basic, Cellular, Value Added Serv and Global Mobile Personal Communica by Satellite, FDI is limited to 49% subje licencing and security requirements adherence by the companies (who investing and the companies in which investment is being made) to the lic conditions for foreign equity cap and loc period for transfer and addition of equity other license provisions.

(ii) ISPs with gateways, radio paging end-to-end bandwidth, FDI is permitted 74% with FDI, beyond 49% requ Government approval. These services w be subject to licensing and sec requirements.

(iii) No equity cap manufacturing activities

is

applicable

(iv) FDI upto 100% is allowed for following activities in the telecom sect (a) ISPs not providing gateways (both satellite and submarine cables); Infrastructure providers providing dark (IP Category I); (c) Electronic Mail, and Voice Mail.

The above would be subject to the follo conditions

(a) FDI upto 100% is allowed subject to condition that such companies would d 26% of their equity in favour of Indian p in 5 years, if these companies are liste other parts of the world.

(b) The above services would be subje licensing and security requireme wherever required.

5.

(i)] Petroleum Refining (Private Sector) (ii) Petroleum Product Marketing (iii) Oil Exploration in both small and medium sized fields

100%

(c) Proposal for FDI beyond 49% sha considered by FIPB on case to case basis FDI permitted upto 100% in case of pri Indian companies

100%

100%

Subject to the existing sectoral policy regulatory frame-work in the oil marke sector Subject to and under the policy Government on private partici-pation in (a) exploration of oil, and

(b) the discovered fields of nationa

6.

(iv) Petroleum Product Pipelines Housing and Real Estate

100% 100%

7.

Coal & Lignite

***

companies Subject to and under the Government P and Regulations thereof.] Only NRIs are allowed to invest upto 1 in the areas listed below (a) Developm of serviced plots and construction of bui residential premises; (b) Investment in estate covering construction of reside and commercial premises including busi centres and offices; (c) Developmen townships; (d) City and regional level u infrastructure facilities, including both r and bridges; (e) Investment in manufac of building materials; (f) Investmen participatory ventures in (a) to (c) ab (g) Investment in Housing Fin Institutions which is also opened to FD an NBFC. (i) Private Indian companies setting u operating power projects as well as coal lignite mines for captive consumption allowed FDI upto 100%.

(ii) 100% FDI is allowed for setting up processing plants subject to the cond that the company shall not do coal m and shall not sell washed coal or sized from its coal processing plants in the market and shall supply the washed or s coal to those parties who are supplying coal to coal processing plants for washin sizing.

(iii) FDI upto 74% is allowed for explora or mining of coal or lignite for cap consumption.

8.

Venture Capital Fund (VCF) and Venture Capital Company (VCC)

(iv) In all the above cases, FDI is allo upto 50% under the automatic route sub to the condition that such investment not exceed 49% of the equity of a PSU. Offshore Venture Capital Funds/compa are allowed to invest in domestic ven capital undertaking as well as o companies through the automatic ro subject only to SEBI regulation and se

9.

Trading

***

specific caps on FDI. Trading is permitted under automatic r with FDI upto 51% provided it is prim export activities and the undertaking i export house/trading house/super tra house/star trading house.

However, under the FIPB route

(i) 100% FDI is permitted in case of tra companies for the following activities :

(a) exports; (b) bulk imports export/expanded warehouse sales; (c) and carry wholesale trading; (d) o import of goods or services provided at 75% is for procurement and sale of the s group and not for third party use or onw transfer/distribution/sales.

(ii) The following kinds of trading are permitted, subject to provisions of E Policy (a) Companies for providing a sales services (that is not trading per se)

(b) Domestic trading of products of JV permitted at the wholesale level for trading companies who wish to ma manufactured products on behalf of joint ventures in which they have eq participation in India;

(c) Trading of hi-tech items/items requ specialised after-sales service;

(d) Trading of items for social sector;

(e) Trading of diagnostic items;

hi-tech,

medical

(f) Trading of items sourced from the s scale sector under which, based technology provided and laid down qu specifications, a company can market item under its brand name;

(g) Domestic exports;

sourcing

of

products

(h) Test marketing of such items for wh company has approval for manufac provided such test marketing facility wi for a period of two years, and investme setting up manufacturing facilities comm simultaneously with test marketing;

10.

Power

100%

11.

Drugs & Pharmaceuticals

100%

12.

13.

Road and highways, Ports and harbours Hotel & Tourism

100%

100%

(i) FDI upto 100% permitted for e-comm activities subject to the condition that companies would divest 26% of their eq in favour of the Indian public in five yea these companies are listed in other par the world. Such companies would en only in business to business (B2B) commerce and not in retail trading. FDI allowed upto 100% in respect of pro relating to electricity genera transmission and distribution, other atomic reactor power plants. There is limit on the project cost and quantum foreign direct investment. FDI permitted upto 100% for manufactu drugs and pharmaceuticals provided activity does not attract compu licensing or involve use of recombi DNA technology and specific cell/ti targeted formulations. FDI proposal for manufacture of licensable drugs pharmaceuticals and bulk drugs produce recombinant DNA technology and spe cell/tissue targeted formulations require prior Govt. approval. In projects for construction and mainten of roads, highways, vehicular bridges, roads, vehicular tunnels, ports and harbo The term hotels includes restaura beach resorts and other tourist compl

providing accommodation and/or cate and food facilities to tourists. Tou related industry include travel agencies, operating agencies and tourist trans operating agencies, units provid facilities for cultural, adventure and wild experience to tourists, surface, air and w transport facilities to tourists, leis entertainment, amusement, sports health units for tourists Convention/Seminar units Organisations.

For foreign technology agreeme automatic approval is granted if

(i) Upto 3% of the capital cost of the pro is proposed to be paid for technical consultancy services including fees architects design, supervision, etc.;

(ii) Upto 3% of the net turnover is pay for franchising and marketing/pub support fee, and

(iii) Upto 10% of gross operating prof payable for management fee, inclu incentive fee.

14.

Mining

74%

(i) For exploration and mining of diam and precious stones FDI is allowed upto under automatic route,

100%

(ii) For exploration and mining of gold silver and minerals other than diamonds precious stones, metallurgy and proces FDI is allowed upto 100% under automa route,

(iii) Press Note 18 (1998 series) dated 12-1998 would not be applicable for se up 100% owned subsidiaries in so far as mining sector is concerned, subject declaration from the applicant that he ha existing joint venture for the same

15. 16

Advertising Films

100% 100%

and/or the particular mineral. Advertising Sector FDI upto 100% allo on the automatic route Film Sector (Film production, exhib and distribution including rel services/products)

FDI upto 100% allowed on the autom route with no entry-level condition.

17. 18.

Airports Mass Transport Systems

Rapid

74% 100%

19.

Pollution Control & Management

100%

20.

Special Zones

Economic

100%

Govt. approval required beyond 74% FDI upto 100% is permitted on automatic route in mass rapid trans system in all metros including associ real estate development. In both manufacture of pollution co equipment and consultancy for integratio pollution control systems is permitted on automatic route. All manufacturing activities except

(i) Arms and ammunition, explosives allied items of defence equipments, def aircrafts and warships;

(ii) Atomic substances, Narcotics Psychotropic Substances and Hazar Chemicals;

(iii) Distillation and brewing of Alco drinks, and (iv) Cigarette/cigars tobacco substitutes. and

manufact

21.

22.

23

Any other 100% sector/activity (if not included in Annexure A) Air Transport 100% for Services NRIs 49% (Domestic for others Airlines) Townships, 100% housing, built up infrastructure and construction development

No direct or indirect equity participatio foreign airlines is allowed.

The investment shall be subject to following guidelines

(a) Minimum area to be developed u

projects. The sector would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure

each project shall be as under

(i) In case of development of serv housing plots10 hectares

(ii) In case of construction developm project50,000 sq. mtrs.

(iii) In case of combination project, any of the above two conditions.

(b) The investment shall be subject to following conditions

(i) Minimum capitalization of US $ 10 m for wholly owned subsidiaries and US million for joint ventures with In partners. The funds would have to brought in within six months commencement of business of the compa

(ii) Original investment cannot be repatri before a period of three years completion of minimum capitaliza However, the investor may be permitte exit earlier with prior approval of Government through the FIPB.

(c) At least 50% of the project mus developed within a period of five years the date of obtaining all statu clearances. The investor shall not permitted to sell undeveloped plots.

(d) The project shall conform to the no and standards, as laid down in applicable building control regulations, laws, rules, and other regulations of State Government/Municipal/Local B concerned.

(e) The investor shall be responsible

obtaining all necessary approvals, inclu those of the building/layout p developing internal and peripheral areas other infrastructure facilities, paymen development, external development other charges and complying with all o requirements as prescribed under applic rules/bye-laws/regulations of the S Government/Municipal/Local B concerned.

(f) The State Government/Municipal/L Body concerned, which approves building/development plans, shall mo compliance of the above conditions by developer. Note : For the purpose of these guidelines, undeveloped plots will m where roads, water supply, street lighting, drainage, sewerage, and o conveniences, as applicable under prescribed regulations, have not b made available. It will be necessary that the investor provides infrastructure and obtains the completion certificate from the conce local body/service agency before he would be allowed to dispose of serv housing plots.]

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