Modi Government on Reform Overdrive: 10 Facts

The Narendra Modi government on Tuesday announced the easing of foreign direct investment (FDI) norms in 15 sectors including construction, civil aviation, private banking, manufacturing and mining. Some outdated conditionalities that existed along with the sectoral caps have either been done away with or eased, Finance Minister Arun Jaitley said.

1) The Foreign Investment Promotion Board (FIPB) can now clear proposals up to Rs 5,000 crore from the earlier limit of Rs 3,000 crore under single-window clearance.

2) Foreign direct investment up to 49 per cent would be allowed in the defence sector under the automatic route. Currently, FDI up to 49 per cent is allowed in the defence sector but under the government approval route.

3) The government has allowed 100 per cent FDI under automatic route in completed construction projects for operation and management of townships, malls/shopping complexes and business centres. Besides that it has removed restrictions on minimum floor area or minimum capitalisation. The Finance Minister termed it as one of the most important reforms. He expressed optimism that with easing of FDI norms and interest rates coming down, activity in the sector would pick up.

4) Single-brand retail formats have been allowed to sell products through e-commerce. The government has relaxed sourcing norms for single brand entities, subject to government approval.

5) Manufacturers have also been permitted to sell their products through wholesale/retail - including through e-commerce - without government approval.

6) For private banks, the government has removed the distinction between different categories of foreign investment. Accordingly, foreign institutional investors, foreign portfolio investors and qualified foreign investors can now invest up to 74 per cent in the sector, the government said.

7) Regional air transport service (RSOP) will now be eligible for foreign investment up to 49 per cent under automatic route.

8) The FDI limit in DTH (direct-to-home) and cable networks has been increased to 100 per cent. Earlier, the limit was 74 per cent.

9) The government has opened plantation activities in coffee, rubber, cardamom, palm oil tree and olive oil tree plantations to 100 per cent FDI. As per the present FDI policy on the plantation sector, only tea plantation is open to foreign investment.

10) In the broadcast sector, FDI limit on news channels has been hiked from 26 per cent to 49 per cent.