Recent FDI initiatives in India:PIB

Defence Sector:

• During 2014-15, FDI in Defence Industry has been permitted through the Government route up to 49%. Also, higher FDI can be allowed on case to case basis. Further, portfolio investment which was not permitted earlier has now been allowed up to 24% under automatic route.
• Other important changes in the revised policy include doing away of the lock-in period of three years, mandating that Investee Company should be structured to be self-sufficient in areas of product design and development, with full Indian management and control along with Chief Security Officer being resident Indian citizen.

Railway:

Further, FDI in construction, operation and maintenance of identified railway transport infrastructure up to 100% has been permitted through the automatic route. In sensitive areas, from security point of view, FDI beyond 49% would be allowed on a case to case basis.

Insurance:

The permissible FDI in insurance sector has been raised from 26% to 49%, effective from 02.03.2015, in which 26% FDI will be through automatic route and higher equity up to 49% would be permitted through the Government route.

Construction:

• The norms for FDI in Construction Development Projects (which already permitted 100% FDI through automatic route) have been further liberalised.
• The minimum land area restriction has been removed for serviced plots. In case of construction-development projects, minimum built up area of 50,000 sq. meter has now been reduced to floor area of 20,000 sq. meter.
•  Minimum capitalization has been reduced from USD 10 million to USD 5 million. Norms relating to repatriation of funds or exit from the project have also been liberalized. Investor can exit after the completion of the project or after development of trunk infrastructure.
• Earlier provision to bring in entire FDI within six months of the commencement of the project has been amended to provide that FDI can be brought in till the period of 10 years from the commencement of the project or its completion, whichever is earlier.
• To encourage investment in affordable housing, it has been provided that minimum area and capitalization norms will not apply to the projects committing 30% of the total project cost for low cost affordable housing.

Other Measures:

• The Government has also decided to permit FDI up to 100% under the automatic route both for green field and brown field projects for manufacturing of defined medical devices, which would not attract conditions specific for pharmaceutical industry. The definition of medical device for the purpose would be subject to the amendment in Drugs and Cosmetics Act.
• .Composite caps for various sectors for foreign investment have been allowed (with the limited exception of defence and private sector banks) to provide uniformity and simplicity across the sectors for attracting FDI.
• The definition of Non Resident Indian (NRI)investment has been liberalised under Schedule 4 of FEMA.
• The permissible FDI ceiling for approval of Foreign Investment Promotion Board (FIPB) has been enhanced from Rs 2000 crore to Rs 3000 crore.
• Henceforth, facility sharing arrangements between group companies through leasing/subleasing arrangements for larger interest of business, when carried out at arm’s length price in accordance with the Income Tax Act and lease rent earned is under 5% of the revenue of the lessor, such  leasing will not be considered as ‘real estate business’ under FDI policy.
• The Foreign Direct Investment into White Labelled ATM Operations (WLAO)has been allowed upto 100% in automatic route. Prior to this foreign investment in WLAO, was being allowed only through government approval route.
• The Government of India has reviewed the extant FDI Policy and decided to allow Foreign Investment up to 100% in white Label ATM Operations under the automatic route.
• The Government of India has reviewed the extant Foreign Direct Investment (FDI) Policy  on various sectors and made amendments in the Consolidated FDI Policy Circular of 2015 (FDI Policy) effective from May 12, 2015 and as amended from time to time