FDI Policy 2016


  • Changes in FDI policy are meant to liberalise and simplify the FDI policy so as to provide ease of doing business in the country.
  • Its main aim is to allow larger FDI inflows in the country that will contribute to growth of investment, incomes and employment.
FDI norms for following nine sectors have been eased :
  1. Food products:
    • 100% FDI under government approval route has been approved.
    • It will include trading in food products including through e-commerce, in respect of food products manufactured or produced in India.
  1. Defence Sector:
    • Earlier, FDI regime in this sector permits 49% FDI participation in the equity of a company under automatic route.
    • Now, FDI beyond 49% has been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons.
    • The condition of access of state of the art technology has been removed and it has been modified to access to modern or for other reasons
    • FDI limit also has been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act, 1959.
  1. Pharmaceutical Sector:
    • In this sector, 100% FDI under automatic route in greenfield pharma has been approved.
    • FDI up to 100% under government approval in brownfield pharma also has been approved.
    • 74% FDI under automatic route in Brownfield pharmaceuticals.
  1. Aviation Sector:
    • 100% FDI under automatic route in Greenfield and Brownfield Airport Projects to aid in modernization of the existing airports to establish a high standard.
  1. Animal Husbandry:
    • 100% FDI allowed in Animal Husbandry (including breeding of dogs), Aquaculture, Pisciculture and Apiculture under Automatic Route without requirement of controlled conditions.
  1. Single Brand Retail Trading:
    • Entities undertaking single brand retail trading have been relaxed from local sourcing norms up to 3 years.
    • Entities engaged in single brand retail trading of products having ‘state-of-art’ and ‘cutting edge’ technology have been relaxed from local sourcing norms up to 5 years.
Status of FDI Policy in India:
  • With these changes in FDI Policy, Union government has permitted 100% FDI under government approval route for almost every sector, including defence except in few sectors mentioned in the small negative list. 
  • In this list, FDI continues to be prohibited in atomic energy, lottery, gambling, real estate and Real Estate Investments Trusts (REIT) and railways operations.
  • Since 2014, Union Government has brought major FDI policy reforms in a number of sectors, including Insurance, Pension Sector, Defence, Construction Development and Broadcasting etc.
  • Measures undertaken by the Union Government have resulted in increased FDI inflows at 55.46 billion dollars in the financial year 2015-16. This was the highest ever FDI inflow in India for a particular financial year.



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