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).
