The Union Cabinet has liberalised the foreign direct investment (FDI) policy (press release available here).
Some of the key amendments are as follows:
100% FDI in single-brand retail trading (“SBRT”) via the automatic route is now permitted.
Sourcing requirements have been liberalised as follows:
Further, non-resident entities may carry out SBRT, either by themselves or through an Indian entity.
Foreign airlines have now been permitted to invest up to 49% in Air India through the approval route, to permit divestment, subject to substantial ownership and control vesting in an Indian national.
100% FDI under the automatic route has now been permitted in ‘real estate broking services’.
Foreign Institutional Investors/ Foreign Portfolio Investors have now been permitted to invest in ‘Power Exchanges’ through the primary market as well as the secondary market.
The definition of the term ‘medical devices’ is no longer subject to the definition under the Drugs and Cosmetics Act, 1940. The press release also mentions that the definition of the term “medical devices” would be amended, however, details of the proposed amendment have not been provided.
Foreign investment into an Indian company, engaged only in the activity of investing in the capital of other Indian companies/ limited liability partnerships and in ‘Core Investing Companies’ has been liberalised as follows
Issue of shares has now been permitted under the automatic route against non-cash consideration such as pre-incorporation expenses, import of machinery, etc. in sectors allowing FDI under the automatic route.
Investment from a ‘Country of Concern’:
If a foreign investor wishes to specify a particular auditor/ audit firm having international network for an Indian investee company, then a joint audit should be carried out of the Indian investee company along with an auditor who is not part of the same network.
We await the press note in this regard.