FDI in diff. sectors & its prohibition

PROHIBITION ON INVESTMENT IN INDIA.

FDI is prohibited in the following activities/sectors:

(a) Retail Trading (except single brand product retailing)

(b) Lottery Business including Government /private lottery, online lotteries,etc.

(c) Gambling and Betting including casinos etc.

(d) Business of chit fund

(e) Nidhi company

(f) Trading in Transferable Development Rights (TDRs)

(g) Real Estate Business or Construction of Farm Houses

(h) Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco

substitutes

(i) Activities / sectors not opened to private sector investment including Atomic Energy

and Railway Transport (other than Mass Rapid Transport Systems).

Besides foreign investment in any form, foreign technology collaboration in any form

including licensing for franchise, trademark, brand name, management contract is also

completely prohibited for Lottery Business and Gambling and Betting activities.

5.2 SECTOR-SPECIFIC POLICY FOR FDI

In the following sectors/activities, FDI up to the limit indicated against each sector/activity is

allowed/permitted subject to other conditions indicated & security conditions where applicable.

In sectors/activities not listed below, FDI is permitted upto 100% on the automatic route, subject

to applicable laws/sectoral rules/regulations/security conditions.

                  

AGRICULTURE

 Agriculture & Animal Husbandry

a) Floriculture, Horticulture, and               100% Automatic

Cultivation of Vegetables &

Mushrooms under controlled

conditions;

b) Development and production of

Seeds and planting material;

c) Animal Husbandry (including of

breeding of dogs), Pisciculture,

Aquaculture under controlled

conditions; and

d) services related to agro and allied

sectors

Note: Besides the above, FDI is not allowed in any other agricultural  sector/activity

 Tea Plantation

5.2.2.1 Tea sector including tea plantations   100% Government

Note: Besides the above, FDI is not allowed in any other plantation

5.2.2.2 Other conditions:

(i) Compulsory divestment of 26% equity of the company in favour of an

Indian partner/Indian public within a period of 5 years

(ii) Prior approval of the State Government concerned in case of any

future land use change.

INDUSTRY

MINING

Mining and Exploration of metal and non-metal ores including diamond,             100% Automatic

gold, silver and precious ores but excluding titanium bearing minerals

and its ores; subject to the Mines and Minerals( Development &

Regulation) Act, 1957

Coal and Lignite                                                                     100% Automatic

 Mining and mineral separation of                                        100% Government

titanium bearing minerals and

ores, its value addition and

integrated activities

MANUFACTURING

 Manufacture of items reserved for

production in Micro and Small

Enterprises (MSEs)

 FDI in MSEs will be subject to the sectoral caps, entry routes and other

relevant sectoral regulations. Any industrial undertaking which is not a

Micro or Small Scale Enterprise, but manufactures items reserved for the

MSE sector would require Government route where foreign investment is

more than 24% in the capital. Such an undertaking would also require an

Industrial License under the Industries (Development & Regulation) Act

1951, for such manufacture. The issue of Industrial License is subject to a few

general conditions and the specific condition that the Industrial Undertaking

shall undertake to export a minimum of 50% of the new or additional annual

production of the MSE reserved items to be achieved within a maximum

period of three years. The export obligation would be applicable from the date

of commencement of commercial production and in accordance with the

provisions of section 11 of the Industries (Development & Regulation) Act

1951.

 DEFENCE                                                                             26% Government

POWER

Electric Generation, Transmission,                                          100% Automatic

 Distribution and Trading

SERVICES SECTOR

Civil Aviation Sector

1. Airports

(a) Greenfield projects                                                                                                      100% Automatic (b) Existing projects                                                                                                          100% Automatic up to 74%         Government    route beyond74%

                                      

2 Air Transport Services

(a) Air Transport Services would include Domestic Scheduled Passenger

Airlines; Non-Scheduled Air Transport Services, helicopter and

seaplane services.

(b) No foreign airlines would be allowed to participate directly or indirectly

in the equity of an Air Transport Undertaking engaged in operating

Scheduled and Non-Scheduled Air Transport Services except Cargo

airlines.

(c) Foreign airlines are allowed to participate in the equity of companies

operating Cargo airlines, helicopter and seaplane services.

(1) Scheduled Air Transport Service/                                                              49% FDI(100% for NRIs) Automatic

Domestic Scheduled Passenger

Airline

 (2) Non-Scheduled Air Transport                      74% FDI(100% for NRIs)Automatic upto 49%Government route                             

                                                                               49% and up to74%

 (3) Helicopter services/seaplane                          100% Automatic

services requiring DGCA approval

.

 Banking –Private sector

 Banking –Private sector 74% including investment by FIIs  Automatic up to 49% Government route beyond

49% and up to 74%

Banking- Public Sector

 Banking- Public Sector subject to Banking Companies (Acquisition & Transfer of Undertakings) Acts1970/80. This ceiling (20%) is also20% (FDI and Portfolio Investment)Government applicable to the State Bank of India

and its associate Banks.

                           Broadcasting

 Terrestrial Broadcasting FM (FMRadio) subject to such terms and conditions as specified from time to time by Ministry of Information and Broadcasting for grant of permission for setting up of FM Radio Stations                   20% (FDI, NRI & PIO investments and portfolio investment)  Government

Cable Network subject to Cable Television Network Rules, 1994 and other conditions as specified from

time to time by Ministry of  Information and Broadcasting

49% (FDI, NRI &PIO investments and portfolioinvestment)  Government

 Direct –to-Home subject to such guidelines/terms and conditions as specified from time to time by Ministry of Information and Broadcasting     49% (FDI, NRI & PIO investments andportfolio investment) Government

Policy for FDI in Commodity Exchange

49% (FDI & FII) [Investment by Registered FII under Portfolio Investment  Scheme (PIS) will be limited to 23% and Investment under FDI Scheme limited to 26% ] Government

5.2.12.3 Other conditions:

(i) FII purchases shall be restricted to secondary market only and

(ii) No non-resident investor/ entity, including persons acting in

concert, will hold more than 5% of the equity in these

companies.

 Insurance                                                26% Automatic

Non-Banking Finance Companies (NBFC)

 Foreign investment in NBFC is allowed under the automatic route in          100% Automatic

only the following activities:

(i) Merchant Banking

(ii) Under Writing

(iii) Portfolio Management

Services

(iv)Investment Advisory Services

(v) Financial Consultancy

(vi)Stock Broking

(vii) Asset Management

(viii) Venture Capital

(ix) Custodian Services

(x) Factoring

(xi) Credit Rating Agencies

(xii) Leasing & Finance

(xiii) Housing Finance

(xiv) Forex Broking

(xv) Credit Card Business

(xvi) Money Changing Business

(xvii) Micro Credit

(xviii) Rural Credit

 Petroleum & Natural Gas Sector                                    100% Automatic

Print Media

 Publishing of Newspaper and periodicals dealing with news and  current affairs

26% (FDI and investment by NRIs/PIOs/FII)  Government

 Publication of Indian editions of foreign magazines dealing with news  and current affairs

26% (FDI and investment by NRIs/PIOs/FII)   Government

 Publication of facsimile edition of foreign newspapers  100% Government

 Satellites – Establishment and operation

 Satellites – Establishment and operation, subject to the sectoral guidelines of Department of  Space/ISRO

74% Government

 Telecommunication

 (i) Telecom services 74% Automatic up to 49% Government route beyond 49% and up to 74%

 Trading

 (i) Cash & Carry Wholesale Trading/ Wholesale Trading (including sourcing from MSEs)

100% Automatic

 Definition: Cash & Carry Wholesale trading/Wholesale trading, would mean sale of goods/merchandise to retailers, industrial, commercial, institutional or other professional business users or to other wholesalers and related subordinated service providers. Wholesale trading would, accordingly, be sales for the purpose of trade, business and profession, as opposed to sales for the purpose of personal consumption. The yardstick to determine whether the sale is wholesale or not would be the type of customers to whom the sale is made and not the size and volume of sales. Wholesale trading would include resale, processing and thereafter sale, bulk imports with ex-port/ex-bonded warehouse business sales and B2B e-Commerce.

E-commerce activities             100% Automatic

 E-commerce activities refer to the activity of buying and selling by a company through the e-commerce platform. Such companies would engage only in  Business to Business (B2B) e-commerce and not in retail trading, inter-alia

implying that existing restrictions on FDI in domestic trading would be

applicable to e-commerce as well.

 Single Brand product trading                                  51% Government

Courier services for carrying packages, parcels and other items which do

not come within the ambit of the Indian Post Office Act, 1898.

100% FDI is allowed under the Government route.