FDI in India
Year End Review- Major FDI
Policy Changes
Government
has put in place an investor-friendly policy on FDI, under which FDI, up to 100%
is permitted, under the automatic route, in most sectors/activities. FDI policy
is reviewed on an ongoing basis, with a view to making it more investor
friendly. FDI helps in the
economic growth of the country by supplementing the domestic capital, bringing
technology transfers, global best practices leading to increased manufacturing
and productive capacity. Overall growth in different sectors of economy results
in job creation.
Following
are the major FDI policy changes made during the year:
Defence:
The
Government vide Press Note 7 /2014 dated 26th August,
2014 has allowed FDI upto 49% on approval route in Defence sector with certain
conditions e.g., the applicant company seeking FIPB approval be an Indian
company owned and controlled by resident Indian citizens. Above 49% the proposal
will be routed to Cabinet Committee on Security on a case to case basis,
wherever it is likely to result in access to modern and state-of-art technology
in the country. FPI investment has been allowed to be made in the Defence sector
upto 24% on automatic route. A number of conditions have been relaxed /removed
making the sector more investor friendly.
The
proposal is expected to result in technology transfer which would help in
increasing the production base and providing an impetus to manufacturing sector
and job creation in India. The measure is expected to not only reduce the heavy
burden of imports and conserve foreign exchange reserves but also make domestic
manufacturing an integral part of GDP growth of the country.
Railways:
The Govt.
(vide PN 8/2014 dated 26th August, 2014) has allowed 100%
private and FDI investment under automatic route in Rail infrastructure (other
than construction, operation and maintenance of (i) Suburban corridor projects
through PPP, (ii) High speed train projects, (iii) Dedicated freight lines, (iv)
Rolling stock including train sets, and locomotives/coaches manufacturing and
maintenance facilities, (v) Railway Electrification, (vi) Signaling systems,
(vii) Freight terminals, (viii) Passenger terminals, (ix) Infrastructure in
industrial park pertaining to railway line/sidings including electrified railway
lines and connectivities to main railway line and (x) Mass Rapid Transport
Systems ) subject to meeting sectoral laws and with the condition that FDI
beyond 49% in sensitive areas from security point of view will be approved by
the Cabinet Committee on Security on a case to case basis.
The
proposal for amendments will facilitate private investment including FDI inflows
into infrastructure projects including elevated rail corridor project in Mumbai,
High Speed Train project, port connectivity projects, dedicated freight
corridors, logistic parks, station development, locomotive manufacturing units
and power plants, through public-private partnerships which would not only bring
in the much needed capital but also technology and global best
practices.
Construction
Development:
The
Government has issued the Press Note No. 10 on 3rd December, 2014
amending the FDI policy regarding Construction Development Sector. Amended
policy includes easing of area restriction norms, reduction of minimum
capitalization and easy exit from project. Further, in order to give boost to
low cost affordable housing, it has been provided that conditions of area
restriction and minimum capitalization will not apply to cases committing 30% of
the project cost towards affordable housing.
FDI
INFLOWS
Total FDI
into India, since April, 2000, including equity inflows, reinvested earnings and
other capital, is US $ 345.29 billion (April, 2000-September, 2014). During the
calendar year 2014 (i.e. during January- September, 2014), FDI equity inflows of
US $ 22.43 billion have been received. This represents increase of 24% over the
FDI equity inflows of US $ 18.07 Billion received during the corresponding
period (January- September 2013) of the previous calendar year
(2013).
During the
financial year 2014-15 (i.e. April- September, 2014), FDI equity inflows of US $
14.69 billion have been received. This represents an increase of 17% over the
FDI equity inflows of US$ 12.59 billion received during the corresponding period
(April 2013- September, 2013) of the previous financial year (2013-14
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