Govt approves 100% FDI in aviation, defence, e-commerce

Government on Monday relaxed foreign direct investment norms in a host of sectors including civil aviation, single-brand retail, defence and pharma by permitting more investments under automatic route.

Other sectors in which FDI norms have been relaxed include e-commerce in food products, broadcasting carriage services, private security agencies and animal husbandry.

"Now most of the sectors would be under automatic approval route, except a small negative list.

"With these changes, India is now the most open economy in the world for FDI," said an official statement.

The decision to further liberalise FDI regime with the objective of "providing major impetus to employment and job creation in India" was taken at a meeting chaired by Prime Minister Narendra Modi on Monday.

This is the second major reform in the FDI space.

The Centre in November had significantly relaxed the foreign investment regime.

Among the major decisions, government allowed 100 per cent foreign investment in "scheduled air transport service/ domestic scheduled passenger airline and regional air transport service".

Under the new regime, 49 per cent would be via automatic route and beyond that limit, government nod would be required.

At present, up to 49 per cent FDI is permitted in scheduled airlines.

"For NRIs, 100 per cent FDI will continue to be allowed under automatic route," a statement said.

"However, foreign airlines would continue to be allowed to invest in capital of Indian companies operating scheduled and non-scheduled air-transport services up to the limit of 49 per cent of their paid up capital and subject to the laid down conditions in the existing policy," it added.

To aid in modernisation of existing airports to establish a high standard and help ease the pressure on the existing airports, it has been decided to permit 100 per cent FDI under automatic route in brownfield airport projects.

Earlier, FDI in brownfield airport projects beyond 74 per cent was under approval route.

In defence sector, foreign investment beyond 49 per cent has been permitted through approval route in cases resulting in access to modern technology in the country or for other reasons.

The government has done away with the clauses pertaining to the 'state-of-art' technology.

Earlier policy allowed FDI in defence sector beyond 49 per cent under the approval route on a case-to-case basis subject to the condition that it would result in access to modern and 'state-of-art' technology in the country.

FDI limit for defence sector has also been made applicable to manufacturing of small arms and ammunitions covered under Arms Act 1959.

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