re Singhania & Co.Pvt. Ltd
Singhania & Co

Call now +91-22-2202 0320 / 21 / 22

about Us

Foreign Direct Investment

Foreign Direct Investment regime in India (FDI)

India, over the years, has experienced unprecedented growth and is an integral part of the global economy. India's economy has been growing at an astounding annual rate of 4.5% to 5% since 2002, which has made it shift from a primarily agrarian society to a more service and industry oriented economy at present. There is a significant rise in the ability and desire of middle class, to pay for high quality consumer products, thereby providing a large domestic market for companies which desire to set up consumer manufacturing operations and sales centers in India.

Much of the world is ageing, facing the demographic tax of having to pay for an increasingly elderly population with a shrinking work force. Much of the world has run out of easy paths to growth. Having built infrastructure everywhere and exploited natural resources to their fullest, many countries are left with building bridges to nowhere to stimulate growth. Much of the world is also well-educated, well-fed, and well-connected through roads, telecommunications, and finance. India is unlike the rest of the world. Our population is young, our infrastructure inadequate, and too many Indians are poorly educated, poorly fed, and poorly connected. But this is precisely why our low-hanging opportunities for betterment are plentiful in the coming years. India is set to focus on improving the conditions for growth for all. India's success will be in the jobs that are created, by developing though competitive environment that will result in the emergence of new consumers.

Consumers in India are new kings and queens of the global economy. They have fast changing tastes appetites, and they are transforming the world with their consumption. There will be nearly one billion middle class consumers in India by 2020. They are demanding "more,better,now" for themselves and their children. The number of billionaires is rising; India had 4 in 2001 now there are 55.India will give rise to the world's top ten companies. Some fifty-four million Indians will become college graduates over the next ten years. Over the same period, United States will see just thirty million new college graduates. Rapid growth in India has led to enormous growth in the consumption of the building blocks of households-from copper to corn to chicken to coal-plus almost every other ingredient important to better lives. We estimate that consumer market of India will triple over the current decade. It's once in a life time prize.

India will continue to attract FDI in the coming period and it will be much higher, backed by reforms, the market potential and the fundamentals advantages that India offers, in terms of the infrastructure of good human resources and talent.

FDI - governing provisions and limits

    For those who are non- residents, to set up operations or to invest in India would require compliance with India's Foreign Exchange Regulations, specifically, the ones concerning Foreign Direct Investment. Foreign currency transactions with India including investments are governed by Foreign Exchange Management Act (FEMA) and the delegated legislation there under.

    Under the 'automatic route' in India, FDI up to 100 percent is permitted in most sectors. Investment in India under the Automatic route does not require the prior approval of India's Central Bank, the Reserve Bank of India ("RBI") or the approval of the Central Government (through the Foreign Investment Promotion Board ("FIPB") from the FEMA perspective before making such an investment.

Section wise FDI Limits

    Sector.

    FDI Limit

    Entry Route & Remarks

    Agriculture & Animal Husbandry

    • Floriculture, Horticulture, Apiculture and Cultivation of Vegetables & Mushrooms under controlled conditions
    • Development and Production of seeds and planting material
    • Animal Husbandry(including breeding of dogs), Pisciculture, Aquaculture
    • Services related to agro and allied sectors

    100%

    Automatic

    Plantation Sector

    • Tea sector including tea plantations
    • Coffee plantations
    • Rubber plantations
    • Cardamom plantations
    • Palm oil tree plantations
    • Olive oil tree plantations

    100%

    Automatic

    Mining

    • Mining and Exploration of metal and non-metal ores including diamond, gold, silver and precious ores but excluding titanium bearing minerals and its ores

    100%

    Automatic

    Mining (Coal & Lignite)

    100%

    Automatic

    Mining

    • Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities

    100%

    Government

    Petroleum & Natural Gas

    • Exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products and natural gas, marketing of natural gas and petroleum products etc

    100%

    Automatic

    Petroleum & Natural Gas

    • Petroleum refining by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs.

    49%

    Automatic

    Defence Manufacturing

    100%

    Automatic up to 49%. Above 49% under Government routein cases resulting in access to modern technology in the country

    Broadcasting

    • Teleports(setting up of up-linking HUBs/Teleports)
    • Direct to Home (DTH)
    • Cable Networks (Multi System operators (MSOs) operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability
    • Mobile TV
    • Head end-in-the Sky Broadcasting Service(HITS)

    100%

    Automatic

    Broadcasting

    • Cable Networks (Other MSOs not undertaking up gradation of networks towards digitalization and addressability and Local Cable Operators (LCOs))

    100%

    Automatic

    Broadcasting Content Services

    • Terrestrial Broadcasting FM(FM Radio)
    • Up-linking of ‘News & Current Affairs’ TV Channels

    49%

    Government

    Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels

    100%

    Automatic

    Print Media

    • Publishing of newspaper and periodicals dealing with news and current affairs
    • Publication of Indian editions of foreign magazines dealing with news and current affairs

    26%

    Government

    Publishing/printing of scientific and technical magazines/specialty journals/ periodicals, subject to compliance with the legal framework as applicable and guidelines issued in this regard from time to time by Ministry of Information and Broadcasting.

    100%

    Government

    Publication of facsimile edition of foreign newspapers

    100%

    Government

    Civil Aviation – Airports

    • Green Field Projects & Existing Projects

    100%

    Automatic

    Civil Aviation – Air Transport Services

    • Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline
    • Regional Air Transport Service (Foreign Airlines are barred from Investing in Air India)

    100%

    Automatic up to 49%
Above 49% under Government route
100% Automatic for NRIs

    Civil Aviation

    • Non-Scheduled Air Transport Service
    • Helicopter services/seaplane services requiring DGCA approval
    • Ground Handling Services subject to sectoral regulations and security clearance
    • Maintenance and Repair organizations; flying training institutes; and technical training institutions

    100%

    Automatic

    Construction Development: Townships, Housing, Built-up Infrastructure

    100%

    Automatic

    Industrial Parks (new & existing)

    100%

    Automatic

    Satellites- establishment and operation, subject to the sectoral guidelines of Department of Space/ISRO

    100%

    Government

    Private Security Agencies

    74%

    Automatic up to 49%. Above 49% & up to 74% under Government route

    Telecom Services

    100%

    Automatic up to 49%. Above 49% under Government route

    Cash & Carry Wholesale Trading

    100%

    Automatic

    E-commerce activities (e-commerce entities would engage only in Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce.)

    100%

    Automatic

    Single Brand retail tradingLocal sourcing norms will be relaxed up to three years and a relaxed sourcing regime for another five years for entities undertaking Single Brand Retail Trading of products having ‘state-of-art’ and ‘cutting edge’ technology.

    100%

    Automatic

    Multi Brand Retail Trading

    51%

    Automatic

    Duty Free Shops

    100%

    Government

    Railway InfrastructureConstruction, operation and maintenance of the following

    • Suburban corridor projects through PPP
    • High speed train projects
    • Dedicated freight lines
    • Rolling stock including train sets, and locomotives/coaches manufacturing and maintenance facilities
    • Railway Electrification
    • Signaling systems
    • Freight terminals
    • Passenger terminals
    • Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivities to main railway line
    • Mass Rapid Transport Systems.

    100%

    Automatic

    Asset Reconstruction Companies

    100%

    Automatic

    Banking- Private Sector

    74%

    Automatic up to 49%. Above 49% & up to 74% under Government route

    Banking- Public Sector

    20%

    Government

    Credit Information Companies (CIC)

    100%

    Government

    Infrastructure Company in the Securities Market

    49%

    Automatic

    Insurance

    • Insurance Company
    • Insurance Brokers
    • Third Party Administrators
    • Surveyors and Loss Assessors
    • Other Insurance Intermediaries

    49%

    Automatic

    Pension Sector

    49%

    Automatic

    Power Exchanges

    49%

    Automatic

    White Label ATM Operations

    100%

    Automatic

    Financial services activities regulated by RBI, SEBI, IRDA or any other regulator

    100%

    Automatic

    Pharmaceuticals(Green Field)

    100%

    Automatic

    Pharmaceuticals(Brown Field)

    100%

    Automatic

    Food products manufactured or produced in India. Trading, including through e-commerce, in respect of food products manufactured or produced in India.

    100%

    Automatic

Prohibited Sectors

FDI is prohibited in the following sectors

    - Lottery Business including Government/private lottery, online lotteries, etc.

    - Gambling and Betting including casinos etc.

    - Chit funds

    - Nidhi company

    - Trading in Transferable Development Rights (TDRs)

    - Real Estate Business or Construction of Farm Houses (Real estate business does not include development of townships, construction of residential /commercial premises, roads or bridges )

    - Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes

    - Activities/sectors not open to private sector investment e.g. Atomic Energy and Railway operations (other than permitted activities)