FDI Policy 2018

New Changes:
  • 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.
Key amendments approved
  • 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.
FDI policy on Single Brand Retail Trading
  • 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.
Construction Development
  • 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.
FDI in Civil Aviation
  • 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.
Power Exchanges
  • 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.
Medical devices
  • 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.

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