Review of Foreign Direct Investment (FDI) policy on various sectors
The Government of India has reviewed the extant FDI policy on various sectors andhas made following amendments in the Consolidated FDI Policy Circular of 2017 (FDIPolicy), effective from August 28, 2017, and as amended from time to time.
Para 220.127.116.11 of FDI Policy is amended to be read as under:
|Sector/Activity||% of Equity/FDI Cap||Entry Route|
Coal & Lignite
(1) Coal & Lignite mining for captiveconsumption by power projects, iron &steel and cement units and other eligibleactivities permitted under and subject tothe provisions of Coal Mines (SpecialProvisions) Act, 2015 and the Mines andMinerals (Development and Regulation)Act, 1957.
(2) Setting up coal processing plants likewasheries subject to the condition that thecompany shall not do coal mining and
shall not sell washed coal or sized coalfrom its coal processing plants in the open market and shall supply the washed orsized coal to those parties who aresupplying raw coal to coal processing
plants for washing or sizing.
|(3) For sale of coal, coal mining activities
including associated processing
infrastructure subject to the provisions ofCoal Mines (Special Provisions) Act, 2015
and the Mines and Minerals (Development
and Regulation) Act, 1957 as amended
from time to time and other relevant Acts
on the subject.
Following new Clause 18.104.22.168.2 (iii) is added under other conditions of Para 22.214.171.124.2of FDI Policy:
“Associated Processing Infrastructure” as contained at Para 126.96.36.199 above includescoal washery, crushing, coal handling, and separation (magnetic and non-magnetic).”
Para 188.8.131.52 of FDI Policy is amended to be read as under:
“Subject to the provisions of the FDI policy, foreign investment in ‘manufacturing’sector is under automatic route. Manufacturing activities may be either self-manufacturing by the investee entity or contract manufacturing in India through alegally tenable contract, whether on Principal to Principal or Principal to Agent basis.Further, a manufacturer is permitted to sell its products manufactured in Indiathrough wholesale and/ or retail, including through e-commerce, without Governmentapproval.”
Single Brand Retail Trading
Para 184.108.40.206 of FDI Policy is amended to read as under:
|Sector/Activity||% of Equity/
|Single Brand Product retail trading||100%||Automatic|
|(1) Foreign Investment in Single Brand Product retail trading is aimed atattracting investments in production and marketing, improving the availability ofsuch goods for the consumer, encouraging increased sourcing of goods fromIndia, and enhancing competitiveness of Indian enterprises through access toglobal designs, technologies and management practices.
(2) FDI in Single Brand Product retail trading would be subject to the followingconditions:
(b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
(c) ‘Single Brand’ product-retail trading would cover only products which are branded during manufacturing.
(d) A non-resident entity or entities, whether owner of the brand or otherwise, shall be permitted to undertake ‘single brand’ product retail trading in the country for the specific brand, either directly by the brand owner or through a legally tenable agreement executed between the Indian entity undertaking single brand retail trading and the brand owner.
(e) In respect of proposals involving foreign investment beyond 51%, sourcing of 30% of the value of goods procured, will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. The quantum of domestic sourcing will be self-certified by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts which the company will be required to maintain. This procurement requirement would have to be met, in the first instance, as an average of five years’ total value of the goods procured, beginning 1st April of the year of commencement of SBRT business (i.e. opening of first store or start of online retail, whichever is earlier). Thereafter, SBRT entity shall be required to meet the 30% local sourcing norms on an annual basis. For the purpose of ascertaining the sourcing requirement, the relevant entity would be the company, incorporated in India, which is the recipient of foreign investment for the purpose of carrying out single-brand product retail trading.
(f) For the purpose of meeting local sourcing requirement laid down at para (e) above, all procurements made from India by the SBRT entity for that single brand shall be counted towards local sourcing, irrespective of whether the goods procured are sold in India or
exported. SBRT entity is also permitted to set off sourcing of goods from India for global operations against the mandatory sourcing requirement of 30%. For this purpose, ‘sourcing of goods from India for global operations’ shall mean value of goods sourced from India for
global operations for that single brand (in INR terms) in a particular financial year directly by the entity undertaking SBRT or its group companies (resident or non-resident), or indirectly by them through a third party under a legally tenable agreement.
(g) An SBRT entity operating through brick and mortar stores can also undertake retail trading through e-commerce. However, retail trading through e-commerce can also be undertaken prior to opening of brick and mortar stores, subject to the condition that the entity opens brick and mortar stores within 2 years from date of start of online retail.
(i)Conditions mentioned at Para 220.127.116.11 (2) (b)& 18.104.22.168 (2) (d) will not be applicable for undertaking SBRT of Indian brands.
(ii) Indian brands should be owned and controlled by resident Indian citizens and/or companies which are owned and controlled by resident Indian citizens.
(iii) Sourcing norms will not be applicable up to three years from commencement of the business i.e. opening of first store or start of online retail, whichever is earlier for entities undertaking single brand retail trading of products having `state-of-art’ and ‘cutting-edge’ technology and where local sourcing is not possible. Thereafter, provisions of Para 22.214.171.124 (2) (e) will be applicable. A Committee under the Chairmanship of Secretary, DPIIT, with representatives from NITI Aayog, concerned Administrative Ministry and independent technicalexpert(s) on the subject will examine the claim of applicants on the issue of theproducts being in the nature of ‘state-of-art’ and ‘cutting-edge’ technology where local sourcing is not possible and give recommendations for such relaxation.
Following new clause 126.96.36.199.3 is added under para 188.8.131.52 of the FDI policy:
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