FDI Policy 2018

The Union Cabinet has approved number of amendments to Foreign Direct Investment (FDI) Policy.

The purpose of amendments is to simplify and liberalise FDI policy in India to provide ease of doing business in country.

The liberalized policy will lead to larger FDI inflows contributing to growth of investment, employment and income.

100% FDI in Single Brand Retail Trading under automatic route.

100% FDI under automatic route in Construction Development (Real estate Broking)

Foreign airlines allowed investing up to 49% in Air India under government approval route.

FIIs/FPIs allowed investing in Power Exchanges through primary market.

Definition of ‘medical devices’ amended in FDI Policy.

The existing policy FDI policy on SBRT allows 49% FDI under automatic route, and beyond 49% up to 100% is allowed through government approval route.

The amendment now permits 100% FDI for SBRT under automatic route.

It also relaxed sourcing norms for such entities.

The amendment clarifies that real-estate broking service does not come under real estate business. Therefore, it is eligible for 100% FDI under automatic route.

Foreign airlines are allowed to invest capital in Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49% of their paid-up capital under government approval route.

However, this provision was not applicable to Air India, implying that foreign airlines could not invest in Air India.

The amendment does away with this restriction and allows foreign airlines to invest up to 49% under approval route in Air India.

The present FDI policy allows 49% FDI in Power Exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010 under automatic route.

However, Foreign Portfolio Investors (FPIs) and Foreign Institutional Investors (FIIs) purchases were restricted to secondary market only.

The amendment now allows FIIs/FPIs to invest in Power Exchanges through primary market as well.

The approved FDI Policy changes definition of ‘medical devices’.

Earlier FDI policy on pharmaceuticals sector provided “Definition of medical device as contained in FDI Policy will be subject to amendment in Drugs and Cosmetics Act.”

Now the reference to Drugs and Cosmetics Act from FDI policy will be dropped.