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Revised FDI Policy released

20th April, 2013

Consolidated and revised Foreign Direct Investment (FDI) Policy has been issued by the Department of Industrial Policy and Promotion in the Ministry of Commerce & Industry. The Circular No. 1 of 2013 incorporates the policy changes in multi brand retailing, civil aviation, investment from Pakistan etc. in the main policy.

Single-brand retail

The earlier requirement that the foreign investor in single brand retailing shall also be the owner of the international brand has been done away with. The Policy stipulates that only one non-resident entity with a valid agreement with the brand owner shall be allowed to undertake single brand retailing. Further, local sourcing of 30% of the value of goods purchased has been made mandatory for foreign investment of more than 51% in single brand retailing. 

Asset reconstruction companies

Investment limit (including FDI and FII) in Asset Reconstruction Companies (ARCs) has been raised from 49% to 74% under government approval route.

Broadcasting sector

FDI in various services in the broadcasting sector such as DTH and cable network has been raised to 74% subject to certain security conditions. Investment upto 49% in this sector will be under automatic route and between 49-74% after government approval. 

Non-banking financial companies

NBFCs with 75% to 100% FDI and minimum capitalization of $50 million, can set up step down subsidiaries for specific NBFC activities, without any restriction on the number of operating subsidiaries and without bringing in additional capital. Earlier, this was available only to NBFCs with 100% FDI. 

Limited Liability Partnerships

The mandatory requirement that foreign capital participation in LLPs shall only be through cash consideration or through normal banking channels shall be considered optional in the event of conversion of a company with FDI to an LLP. The circular on these changes is in force from 5-4-2013.
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