Wednesday 30 July 2014

Relaxation of Conditions for FDI in Different Sectors

Review of the FDI policy of the country is an ongoing process and Government has taken a number of steps in the recent past to make India an attractive investment destination.

As regards proposal to allow Foreign Direct Investment (FDI) in different sectors, Finance Minister, in his Budget Speech, given on 10.7.2014, has made following statement:

“The policy of the NDA Government is to promote Foreign Direct Investment (FDI) selectively in sectors where it helps the larger interest of the Indian Economy. FDI in several sectors is an additionality of resource which helps in promoting domestic manufacture and job creation. India today needs a boost for job creation. Our manufacturing sector in particular needs a push for job creation.

India today is the largest buyer of defence equipment in the world. Our domestic manufacturing capacities are still at a nascent stage. We are buying substantial part of our Defence requirements directly from foreign players. Companies controlled by foreign governments and foreign private sector are supplying our Defence requirements to us at a considerable outflow of foreign exchange. Currently we permit 26 per cent FDI in Defence manufacturing. The composite cap of foreign exchange is being raised to 49 per cent with full Indian management and control through the FIPB route.

The Insurance sector is investment starved. Several segments of the Insurance sector need an expansion. The composite cap in the Insurance sector is proposed to be increased up to 49 per cent from the current level of 26 per cent, with full Indian management and control, through the FIPB route.

To encourage development of Smart Cities, which will also provide habitation for the neo-middle class, requirement of the built up area and capital conditions for FDI is being reduced from 50,000 square metres to 20,000 square metres and from USD 10 million to USD 5 million respectively with a three year post completion lock in.

To further encourage this, projects which commit at least 30 per cent of the total project cost for low cost affordable housing will be exempted from minimum built up area and capitalisation requirements, with the condition of three year lock-in. FDI in the manufacturing sector is today on the automatic route. The manufacturing units will be allowed to sell its products through retail including E-commerce platforms without any additional approval.”

The total FDI Inflows from April 2011 to May 2014 is as under:

Sl No
Financial Year (Apr-Mar)
FDI equity inflows
(US$ million)
*Total FDI inflows
(US$ million)
1
2011-12
35,121
46,556
2
2012-13
22,423
34,298
3
2013-14
24,299
36,396
4
2014-15 (Apr-May)
5,309
8,011
Grand Total
87,152
125,261
* Includes equity inflows, Equity capital of unincorporated bodies, Re-invested Earnings and other capital.

A statement on the sector-wise FDI equity inflows from April 2011 to May 2014 is at Annexure -1.

ANNEXURE-I

STATEMENT REFERRED TO IN REPLY TO PART (d) OF THE RAJYA SABHA UNSTARRED QUESTION NO. 2178 FOR ANSWER ON 30th JULY, 2014 REGARDING RELAXATION OF CONDITIONS FOR FDI IN DIFFERENT SECTORS
SECTOR-WISE FDI EQUITY INFLOWS
FROM APRIL 2011 TO MAY 2014
(Amount in million)
S.No
Sector
Amount of FDI Inflows
%age of Total Inflows


(In US$)

1
SERVICES SECTOR (Fin.,Banking,Insurance,Non Fin/Business,Outsourcing,R&D,Courier,Tech. Testing and Analysis, Other)
12,848.25
14.74
2
DRUGS & PHARMACEUTICALS
6,314.70
7.25
3
CONSTRUCTION DEVELOPMENT: Townships, housing, built-up infrastructure and construction-development projects
5,920.15
6.79
4
CHEMICALS (OTHER THAN FERTILIZERS)
5,213.64
5.98
5
TELECOMMUNICATIONS
5,119.67
5.87
6
HOTEL & TOURISM
4,968.75
5.70
7
FOOD PROCESSING INDUSTRIES
4,654.07
5.34
8
AUTOMOBILE INDUSTRY
4,050.62
4.65
9
METALLURGICAL INDUSTRIES
3,935.05
4.52
10
POWER
3,400.87
3.90
11
TRADING
3,023.87
3.47
12
COMPUTER SOFTWARE & HARDWARE
2,520.47
2.89
13
PETROLEUM & NATURAL GAS
2,357.01
2.70
14
NON-CONVENTIONAL ENERGY
2,154.87
2.47
15
INDUSTRIAL MACHINERY
1,726.06
1.98
16
MISCELLANEOUS MECHANICAL & ENGINEERING INDUSTRIES
1,678.63
1.93
17
MISCELLANEOUS INDUSTRIES
1,542.39
1.77
18
INFORMATION & BROADCASTING (INCLUDING PRINT MEDIA)
1,522.39
1.75
19
HOSPITAL & DIAGNOSTIC CENTRES
1,371.36
1.57
20
RUBBER GOODS
1,206.46
1.38
21
CONSTRUCTION (INFRASTRUCTURE) ACTIVITIES
1,192.23
1.37
22
FERMENTATION INDUSTRIES
993.59
1.14
23
ELECTRICAL EQUIPMENTS
965.39
1.11
24
CONSULTANCY SERVICES
947.11
1.09
25
PRIME MOVER (OTHER THAN ELECTRICAL GENERATORS)
715.71
0.82
26
CEMENT AND GYPSUM PRODUCTS
563.01
0.65
27
SOAPS, COSMETICS & TOILET PREPARATIONS
554.65
0.64
28
EDUCATION
547.25
0.63
29
TEXTILES (INCLUDING DYED,PRINTED)
478.65
0.55
30
MEDICAL AND SURGICAL APPLIANCES
459.60
0.53
31
PAPER AND PULP (INCLUDING PAPER PRODUCTS)
442.12
0.51
32
ELECTRONICS
381.90
0.44
33
RAILWAY RELATED COMPONENTS
360.68
0.41
34
AGRICULTURE SERVICES
311.33
0.36
35
MACHINE TOOLS
295.82
0.34
36
GLASS
285.57
0.33
37
SEA TRANSPORT
242.70
0.28
38
MINING
221.22
0.25
39
VEGETABLE OILS AND VANASPATI
195.63
0.22
40
PRINTING OF BOOKS (INCLUDING LITHO PRINTING INDUSTRY)
176.87
0.20
41
CERAMICS
172.58
0.20
42
AGRICULTURAL MACHINERY
164.01
0.19
43
DIAMOND,GOLD ORNAMENTS
137.95
0.16
44
SCIENTIFIC INSTRUMENTS
125.43
0.14
45
RETAIL TRADING (SINGLE BRAND)
117.17
0.13
46
AIR TRANSPORT (INCLUDING AIR FREIGHT)
97.63
0.11
47
FERTILIZERS
95.80
0.11
48
COMMERCIAL, OFFICE & HOUSEHOLD EQUIPMENTS
81.80
0.09
49
TIMBER PRODUCTS
64.94
0.07
50
LEATHER,LEATHER GOODS AND PICKERS
64.42
0.07
51
EARTH-MOVING MACHINERY
56.61
0.06
52
BOILERS AND STEAM GENERATING PLANTS
53.35
0.06
53
SUGAR
20.45
0.02
54
TEA AND COFFEE (PROCESSING & WAREHOUSING COFFEE & RUBBER)
11.47
0.01
55
GLUE AND GELATIN
6.81
0.01
56
MATHEMATICAL,SURVEYING AND DRAWING INSTRUMENTS
6.71
0.01
57
INDUSTRIAL INSTRUMENTS
5.11
0.01
58
DEFENCE INDUSTRIES
4.89
0.01
59
COAL PRODUCTION
2.96
0.00
60
COIR
1.24
0.00
61
DYE-STUFFS
0.58
0.00
62
PORTS
0.32
0.00
63
PHOTOGRAPHIC RAW FILM AND PAPER
0.00
0.00

Grand Total
87,152.46

Note: Amount includes the Inflows received through SIA/FIPB route, acquisition of existing shares and RBI's automatic route only.

The information was given by the Minister of State (Independent Charge) in the Ministry of Commerce & Industry Smt. Nirmala Sitharaman in a written reply in Rajya Sabha today.

Courtesy: pib.nic.in

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