Amendment of existing policy on Foreign Direct Investment in Single-Brand Product Retail Trading Press Note No. 4 (2012 Series) dated 20th September, 2012
Single-Brand Product Retail Trading
Press Note No. 4 has modified the existing conditions in respect of the Foreign Investment in Single- Brand Product Retail Trading by removing the Brand Ownership criteria and providing that only one non-resident entity, whether owner of the brand or otherwise, will be permitted to undertake single brand product retail trading in the country, for that specific brand. It also provides that the company receiving FDI cannot undertake retail trading, in any form, by means of e-commerce.
Review of the policy on Foreign Direct Investment – allowing FDI in Multi-Brand Retail Trading
Press Note No. 5 (2012 Series) dated September 20, 2012
Multi-Brand Retail Trading
Press Note No. 5 has: –
a. Substituted the list of ‘Prohibited Sectors’ i.e. sectors in which FDI is prohibited. The new Paragraph 6.1 of “Circular 1 of 2012 – Consolidated FDI Policy” issued on April 10, 2012 reads as follows: –
“6.1 Prohibited Sectors:
FDI is prohibited in:
(a) Lottery Business, including Government/ private lottery, online lotteries, etc.
(b) Gambling and Betting, including casinos etc.
(c) Chit funds
(d) Nidhi company
(e) Trading in Transferable Development Rights (TDRs)
(f) Real Estate Business or Construction of Farm Houses
(g) Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
(h) Activities/sectors not open to private sector investment e.g. Atomic Energy and Railway Transport (other than Mass Rapid Transport Systems).
Foreign technology collaboration in any form, including licensing for franchise, trademark, brand name, management contract, is also prohibited for Lottery Business and Gambling and Betting activities.”
b. It has inserted a new Paragraph 6.2.16.5 in the “Circular 1 of 2012 – Consolidated FDI Policy” issued on 10th April, 2012 containing the terms and conditions relating to FDI in Multi-Brand Retail Trading. The broad guidelines are: –
a. This is an enabling clause in regard to implementation of the policy and the State Governments/Union Territories will have to decide for themselves whether to permit the same or not.
b. FDI up to 51% is permitted under the Approval Route.
c. Multi-Brand retailing will be permitted in all products, subject to certain terms and conditions.
d. Minimum investment by the foreign investor will be US $ 100 million.
e. At least 50% of the total FDI will have to be invested in ‘back-end’ infrastructure, excluding land cost and rentals, within 3 years of bringing in the 1st tranche of FDI.
f. At least 30% of the value of manufactured /processed products purchased by the company will have to be from Indian ‘small industries’.
g. Retail sales outlet can be set-up in cities with a population of more than 10 lakh as per 2011 Census only.
h. Retail trading, in any form, by means of e-commerce cannot be undertaken by the company.
Review of policy on Foreign Direct Investment in the Civil Aviation sector
Press Note No. 6 (2012 Series) dated 20th September, 2012
Civil Aviation Sector
Press Note No. 6 has amended Paragraph 6.2.9.3 of “Circular 1 of 2012 – Consolidated FDI Policy” issued on 10th April, 2012, so as to permit foreign airlines to invest up to 49% under the Approval Route, subject to certain terms and conditions, in the capital of Indian companies operating scheduled and non-scheduled air transport services. The investment limit of 49% will include FDI as well as FII investment.
Review of the policy on Foreign Investment (FI) in companies operating in the Broadcasting Sector
Press Note No. 7 (2012 Series) dated 20th September, 2012
Broadcasting Sector
Press Note No. 7 has substituted Paragraph 6.2.7 of “Circular 1 of 2012 – Consolidated FDI Policy” issued on April 10, 2012. Major changes in the substituted Paragraph pertain to: –
a. Teleports (setting up up-linking HUBs Teleports); Direct to Home (DTH); Cable Networks (MSOs operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability):
In this case, limit on Foreign Investment has been increased from 49% to 74%. Foreign investment up to 49% is permitted under the Automatic Route, while foreign investment beyond 49% and up to 74% is permitted under the Approval Route.
b. Mobile TV:
Foreign Investment is permitted up to 74%. Foreign investment up to 49% is permitted under the Automatic Route, while foreign investment beyond 49% and up to 74% is permitted under the Approval Route.
The above investment is also subject to the terms and conditions issued by the Ministry of Information & Broadcasting.
Policy on foreign investment in Power Exchanges
Press Note No. 8 (2012 Series) dated 20th September, 2012
Power Exchanges
Press Note No. 8 has inserted a new Paragraph 6.2.26 in the “Circular 1 of 2012 – Consolidated FDI Policy” issued on April 10, 2012 containing the terms and conditions relating to FDI in Power Exchanges. Major terms and conditions are: –
a. The Power Exchange must be registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010.
b. Foreign investment up to 49% is permitted – FDI 26% under Approval Route & FII 23% under Automatic Route.
c. FII purchases must be restricted to secondary markets only.
d. No single non-resident investor/entity, including persons acting in concert, can hold more than 5% of the equity of the Power Exchange Company.
