A foreign company can start its business operations in India by incorporating a company under the Companies Act, 2013 through either a Joint Venture (JV) or forming a Wholly Owned Subsidiary (WOS). Foreign equity in such Indian companies can be up to 100%, subject to Sectoral equity caps under the FDI policy. The Sectoral caps as per the FDI policy are as follows:
Chart for Sectoral Caps for FDI in INDIA showing FDI Limit, Foreign Investment Cap (%) and Entry Route
Sector | FDI Limit | Entry Route & Remarks |
Agriculture & Animal Husbandry
|
100% | Automatic |
Plantation Sector
|
100% | Automatic |
Mining
Mining and Exploration of metal and non-metal ores including diamond, gold, silver and precious ores but excluding titanium bearing minerals and its ores |
100% | Automatic |
Mining (Coal & Lignite) | 100% | Automatic |
Mining
Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities |
100% | Government |
Petroleum & Natural Gas
Exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products and natural gas, marketing of natural gas and petroleum products etc |
100% | Automatic |
Petroleum & Natural Gas
Petroleum refining by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs. |
49% | Automatic |
Defence Manufacturing | 100% | Automatic up to 49% Above 49% under Government route in cases resulting in access to modern technology in the country |
Broadcasting
|
100% | Automatic |
Broadcasting Cable Networks (Other MSOs not undertaking up gradation of networks towards digitalization and addressability and Local Cable Operators (LCOs)) |
100% | Automatic |
Broadcasting Content Services
|
49% | Government |
Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels | 100% | Automatic |
Print Media
|
26% | Government |
Publishing/printing of scientific and technical magazines/specialty journals/ periodicals, subject to compliance with the legal framework as applicable and guidelines issued in this regard from time to time by Ministry of Information and Broadcasting. | 100% | Government |
Publication of facsimile edition of foreign newspapers | 100% | Government |
Civil Aviation – Airports Green Field Projects & Existing Projects |
100% | Automatic |
Civil Aviation – Air Transport Services
|
100% | Automatic up to 49% Above 49% under Government route 100% Automatic for NRIs |
Civil Aviation
|
100% | Automatic |
Construction Development: Townships, Housing, Built-up Infrastructure | 100% | Automatic |
Industrial Parks | 100% | Automatic |
Satellites- establishment and operation, subject to the sectoral guidelines of Department of Space/ISRO | 100% | Government |
Private Security Agencies | 74% | Automatic up to 49% Above 49% & up to 74% under Government route |
Telecom Services | 100% | Automatic up to 49% Above 49% under Government route |
Cash & Carry Wholesale Trading | 100% | Automatic |
E-commerce activities (e-commerce entities would engage only in Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce.) | 100% | Automatic |
Single Brand retail trading
Local sourcing norms will be relaxed up to three years and a relaxed sourcing regime for another five years for entities undertaking Single Brand Retail Trading of products having ‘state-of-art’ and ‘cutting edge’ technology. |
100% | Automatic up to 49% Above 49% under Government route |
Multi Brand Retail Trading | 51% | Government |
Duty Free Shops | 100% | Automatic |
Railway Infrastructure
|
100% | Automatic |
Asset Reconstruction Companies | 100% | Automatic |
Banking- Private Sector | 74% | Automatic up to 49% Above 49% & up to 74% under Government route |
Banking- Public Sector | 20% | Government |
Credit Information Companies (CIC) | 100% | Automatic |
Infrastructure Company in the Securities Market | 49% | Automatic |
Insurance
|
49% | Automatic |
Pension Sector | 49% | Automatic |
Power Exchanges | 49% | Automatic |
White Label ATM Operations | 100% | Automatic |
Non-Banking Finance Companies (NBFC) | 100% | Automatic |
Pharmaceuticals(Green Field) | 100% | Automatic |
Pharmaceuticals(Brown Field) | 100% | Automatic up to 74% Above 74% under Government route |
Food products manufactured or produced in India
Trading, including through e-commerce, in respect of food products manufactured or produced in India. |
100% | Government |
Prohibited Sectors for FDI In India
FDI is prohibited in the following sectors
- Lottery Business including Government/private lottery, online lotteries, etc.
- Gambling and Betting including casinos etc.
- Chit funds
- Nidhi company
- Trading in Transferable Development Rights (TDRs)
- Real Estate Business or Construction of Farm Houses (Real estate business does not include development of townships, construction of residential /commercial premises, roads or bridges )
- Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
- Activities/sectors not open to private sector investment e.g. Atomic Energy and Railway operations (other than permitted activities)
CS YOGESH GUPTA can be reached at [email protected] & 7742681270
Is there any sectoral cap on shipping business in India by NRIs
Recently Govt. has increased the sectoral cap of FDI in defense to 74%. I have a question- if an existing Indian company already has some FDI & adds more FDI to reach 74% cap, will the sectoral cap is viewed as a total equity not exceeding 74% combination including existing & new infusion ? or only the infusion after the notification ?