Destination India : Tips for the potential investor
This is the third part of the article, dealing with Capital.
Capital :- In the following sectors 100% Foreign Direct Investment (FDI) has been allowed by the new FDI policy of 2012 :-
· Agriculture & Animal Husbandry including Floriculture, Horticulture, Apiculture and cultivation of Vegetables & Mushrooms under controlled conditions; Development and production of Seeds and planting material; Animal Husbandry(including breeding of dogs), Pisciculture, Aquaculture, under controlled conditions; and services related to agro and allied sectors.
· Tea sector including tea plantations.
· Mining and Exploration of metal and non-metal ores including diamond, gold, silver and precious ores but excluding titanium bearing minerals and its ores; subject to the Mines and Minerals(Development & Regulation) Act, 1957, Coal & Lignite mining for captive consumption by power projects, iron & steel and cement units and other eligible activities permitted under and subject to the provisions of Coal Mines(Nationalization) Act,1973; Setting up coal processing plants like washeries subject to the condition that the company shall not do coal mining and shall not sell washed coal or sized coal from its coal processing plants in the open market and shall supply the washed or sized coal to those parties who are supplying raw coal to coal processing plants for washing or sizing; Mining and mineral separation of titanium bearing minerals & ores, its value addition and integrated activities subject to sectoral regulations and the Mines and Minerals(Development and Regulation Act 1957).
· Petroleum & Natural Gas including exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products and natural gas, marketing of natural gas and petroleum products, petroleum product pipelines, natural gas/pipelines, LNG regasification infrastructure, market study and formulation and Petroleum refining in the private sector, subject to the existing sectoral policy and regulatory framework in the oil marketing sector and the policy of the government on private participation in exploration of oil and the discovered fields of national oil companies.
· Information services including up-linking a Non-News & Current affairs TV Channel.
· Print media including publishing/printing of scientific and technical magazines/ specialty journals /periodicals, subject to compliance with the legal framework, as applicable and guidelines issued in this regard from time to time by Ministry of Information and Broadcasting; Publication of facsimile edition of foreign newspapers.
· Airports including Greenfield projects and existing projects.
· Air transport services including Helicopter services/seaplane services requiring DGCA approval.
· Other services under Civil Aviation sector including maintenance and repair organizations; flying training institutes; and technical training institutions.
· Courier services for carrying packages, parcels and other items which do not come within the ambit of the Indian Post Office Act,1898 and excluding the activity relating to the distribution of letters.
· Townships, housing, built-up infrastructure and construction-development projects (which would include but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure).
· Industrial parks-new and existing.
· Infrastructure provider providing dark fiber, right of way, duct space, tower(IP Category I),Electronic mail, Voice mail.
· Cash & Carry wholesale trading /wholesale trading (including sourcing from MSEs).
· E-commerce activities
· Test marketing of such items for which a company has approval for manufacture, provided such test marketing facility will be for a period of two years , and investment in setting up manufacturing facility commences simultaneously with test marketing.
· Single brand product retail trading.
· Non-Banking Finance Companies in specified activities.
· Pharmaceuticals including Greenfield and existing companies.
Following are the other sector specific limits as specified in the FDI policy of 2012:-
- 26% of FDI is allowed in defence production sector through approval route.
- In Banking-private sector, 74% including investment by FIIs is allowed through automatic route upto 49% and government route beyond 49% and upto 74%. However, in Banking-Public sector,20% (FDI & PIS) is allowed through government route.
- In Broadcasting sector, 49% (FDI & FII) is allowed in setting up hardware facilities such as up-linking, HUB through approval route whereas 26%( FDI & FII) is allowed through approval route in up-linking a news & current affairs TV channel subject to the condition that the portfolio investment from FII/NRI shall not be”persons acting in concert” with FDI investors, as defined in the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997.
- 49% (FDI & FII) is allowed in commodity exchanges through approval route.
- 26% FDI is allowed in insurance sector through automatic route.
- 49% FDI is allowed in refining services of petroleum & natural gas sector through automatic route.
- 26% (FDI and investment by NRIs/PIO/FII) is allowed in publishing of newspaper and periodicals dealing with news and current affairs as well as in publishing of Indian editions of foreign magazines dealing with news and current affairs under the print media sector through approval route.
- 74% FDI is allowed in telecom services through automatic upto 49% and approval route beyond 49% and upto 74%.
SECTOR SPECIFIC LIMITS
26% FDI is allowed
49% FDI is allowed
74% FDI is allowed
Defence production sector through approval route
Broadcasting sector, for setting up hardware facilities such as up-linking, HUB through approval route.
Banking-private sector, through automatic route upto 49% and approval route beyond 49% and upto 74%.
Broadcasting sector, through approval route in up-linking a news & current affairs TV channel subject to the conditions.
Commodity exchange through approval route
Telecom services through automatic route upto 49% and approval route beyond 49% and upto 74%.
Insurance sector through automatic route.
Refining services of petroleum & natural gas sector through automatic route.
Print media sector through approval route
SECTORS WHERE FDI IS BANNED
1. Lottery Business including Government / private lottery, online lotteries etc;
2. Gambling and Betting including casinos etc.;
3. Business of chit fund;
4. Nidhi Company;
5. Trading in Transferable Development Rights (TDRs);
6. Activities/sector not opened to private sector investment;
7. Agriculture (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and cultivation of vegetables, mushrooms etc. under controlled conditions and services related to agro and allied sectors) and Plantations (Other than Tea Plantations);
8. Real estate business, or construction of farm houses; Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco or of tobacco substitutes.
Retail trading in multi-brand consumer goods was hitherto in the banned list but recently the Government has resolved to change the prevailing situation.
Repatriation norms as per new FDI policy of 2012 :-
· As per point no. 7.1.1( ii), AD category-I bank can allow the remittance of sale proceeds of a security (net of applicable taxes)to the seller of shares resident outside India, provided the security has been held on repatriation basis, the sale of security has been made in accordance with the prescribed guidelines and NOC/tax clearance certificate from the Income Tax Department has been produced.
· As per point no. 7.1.2 of FDI policy of 2012, dividends are freely repatriable without any restrictions (net after Tax deduction at source or Dividend Distribution Tax, if any, as the case may be). The repatriation is governed by the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, as amended from time to time.
· As per point no. 7.1.3 of FDI policy of 2012, interest on fully, mandatorily and compulsorily convertible debentures is also freely repatriable without any restrictions (net of applicable taxes). The repatriation is governed by the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, as amended from time to time.