Changes in FDI Policy

  • June 23, 2016
  • Dushyant Sharma
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Indian Govt. keeps on heading towards reforms and for boosting the domestic economy Govt. On Monday announced new FDI policy for the key sectors such as defence, civil aviation, pharmaceutical and many more.

The Government has allowed complete foreign ownership in many sectors. It means 100% equity shares can be issued to a foreign entity.

This move has been taken to allow the foreign companies to set up their manufacturing unit in the form company so that manufacturing sector can move ahead. This can create huge employment opportunity in India and somewhere keep balanced contribution to the GDP of three India's pillar, namely, agriculture sector, manufacturing sector and service sector.

Key changes in FDI policy:

  1. Food Product: 100% FDI is permitted for trading, including through e-commerce, in respect of food products manufactured or produced in India by taking prior government approval.
  1. Broadcasting: 100% FDI will be allowed under automatic route for direct-to-home TV services.
  1. Defence sector: The condition of access to state-of-art technology has been done away with.
  1. Pharma Sector: 74% FDI will now be permitted under automatic route in existing pharmaceutical ventures i.e. It is considered as brownfield investment, not Greenfield investment which is made into a new venture.
  1. Aviation: 100% FDI in existing airport projects is to be allowed without government permission. This will help to develop and modernise the airport.
  1. Establishment of branch office, liaison office or project office: For establishment of branch office, liaison office or project office or any other place of business in India if the principal business relates to Defence, Telecom, Private Security or Information and Broadcasting, approval of Reserve Bank of India or separate security clearance would not be required in cases where FIPB approval or license/permission by the concerned Ministry/Regulator has already been granted.

This decision was taken at a high-level meeting headed by Prime Minister. After undertaking all these radical changes, It has been reported in India Today that India is number 1 investment destination.

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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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