Consolidated FDI Policy Circular, 2016

Consolidated FDI Policy Circular, 2016

Department of Industrial Policy and Promotion (DIPP) has issued the new circular on Consolidated FDI Policy for the year 2016 on 7 June 2016. Given below is a brief note on the comparison between current circular and the previous circular and the deviation from the provisions of the previous circular in the current one:

I.     New Provisions inserted:

1.    Following is the list of items inserted in definition:

a. Employee Stock option scheme

b. Investment vehicle

c. Manufacture

d. Sweat equity share

e. Unit

2.    A Company, trust and partnership firm incorporated outside India owned and controlled by NRIs can invest in India under Schedule 4 of FEMA (Transfer and issue of security by persons resident outside India)with the special dispensation as available to NRIs under the FDI policy.

3.    NRI allowed to subscribe to National Pension System governed by Pension Fund Regulatory and Development Authority (PFRDA).

4.    Provisions with regard to investment vehicle introduced.

5.  Penal provisions separately mentioned in Consolidated policy alongwith Adjudication and Appeals and Compounding Proceedings.

II.  Provisions Amended:

1.    Definitions of following were amended :

a.    capital

b.     Control

c.    Non –resident Indian

d.    Owned

2.    Downstream investment provisions amended to include LLP.

3.  Limits for the recommendations of FIPB for consideration of Cabinet Committee on Economic Affairs (CCEA)on proposals with total foreign equity inflow increased from Rs. 2000 Crore to Rs. 5000 Crore

III.            Sectorwise limits Amendment:

Sr No.	Sector	Before		After
1	i.      Tea sector including tea plantations ii.    Coffee Plantations (Newly introduced) iii.  Rubber Plantations iv.  Cardamom Plantations (Newly introduced) v.    Palm oil tree plantations (Newly introduced) vi.  Olive Oil tree Plantations (Newly introduced)	% of Equity/ FDI Cap	Entry Route	% of Equity/ FDI Cap	Entry Route
		100%	Government route	100%	Automatic Route
2	Defence Industry	49%	Government route up to 49% Above 49% to Cabinet Committee on Security (CCS) on case to case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country	49%	Automatic up to 49% Above 49% under Government route on case to case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country
3	(1)Teleports(setting up of up-linking HUBs/Teleports); (2)Direct to Home (DTH); (3)Cable Networks (Multi System operators (MSOs) operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability); (4)Mobile TV; (5)Headend-in-the Sky Broadcasting Service(HITS)	74%	Automatic up to 49% Government route beyond 49% and up to 74%	100%	Automatic up to 49% Government route beyond 49%
4	Cable Networks (Other MSOs not undertaking upgradation of networks towards digitalization and addressability and Local Cable Operators (LCOs))	49%	Automatic	100%	Automatic up to 49% Government route beyond 49%
5	Terrestrial Broadcasting FM (FM Radio), subject to such terms and conditions, as specified from time to time, by Ministry of Information & Broadcasting, for grant of permission for setting up of FM Radio stations	26%	Government	49%	Government
6	Up-linking of ‘News & Current Affairs’ TV Channels	26%	Government	49%	Government
7	Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels	100%	Government	100%	Automatic
8	Non-Scheduled Air Transport Service	74% FDI (100% for NRIs)	Automatic up to 49% Government route beyond 49% and up to 74%	100%	Automatic
9	Ground Handling Services subject to sectoral regulations and security clearance	74% (100% for NRIs)	Automatic up to 49% Government route beyond 49% and up to 74%	100%	Automatic
10	Satellites- establishment and operation, subject to the sectoral guidelines of Department of Space/ISRO	74%	Government	100%	Government
11	Duty Free Shops	-	-	100%	Automatic
12	Asset Reconstruction Company’ (ARC) means a company registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).	100% of paid-up capital of ARC (FDI+FII/FPI)	Automatic up to 49% Government route beyond 49%	100%	Automatic
13	(i) Insurance Company (ii) Insurance Brokers (iii) Third Party Administrators (iv) Surveyors and Loss Assessors (v)Other Insurance Intermediaries appointed under the provisions of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999)	49% {FDI+FPI(FII,QFI)+NRI+FVCI+DR}	Automatic up to 26% Government route beyond 26% and up to 49%	49%	Automatic
14	Pension Sector	-	-	49%	Automatic

E-Commerce on Business to Commerce i.e. B to C allowed after fulfillment of certain conditions.