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Govt announces 100% FDI in Defence, Pharma, Single Brand Retail, Aviation sectors

Posted Date : 20-Jun-2016 , 10:23:57 pm | Posted By CASANSAAR print Print
Government today approved 100 per cent FDI in a host of sectors including civil aviation, defence, pharma and single brand retail sector 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. The decision was taken at a high level meeting chaired by Prime Minister Narendra Modi to give major impetus to employment and job creation in the country. 

Prime Minister Narendra Modi has welcomed the liberalisation of FDI regime. In a series of tweets, Mr Modi said the move will provide employment in the country and help create jobs. He said India is now the most open economy in the world for Foreign Direct Investment. Mr. Modi further said the new measures undertaken by NDA Government during the past two years have resulted in increased FDI flow. He said India has been rated as number one FDI destination by several global agencies.

In Defence sector, at present upto 49 per cent FDI participation in equity of a company is permitted under automatic route. Now, beyong 49 percent, foreign investment would be through government approval route for access to modern technology. Besides, FDI limit for defence sector has also been made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.

In brown field pharmaceutical sector, the new FDI limit would be up to 74 per cent under automatic route and beyond 74 percent, government approval will continue. In green field pharmaceuticals, 100 per cent FDI is already allowed under automatic route. 

Greenfield investments occur when a parent company begins a new venture by constructing new facilities in a country outside of where the company is headquartered. Brownfield investments occur when a company purchases an existing facility to begin new production. 


In civil aviation, foreign investors barring overseas airlines, can now have up to 100 per cent stake in local carriers. Besides, the norms for FDI in brownfield airports have been permitted upto 100 percent under automatic route.

The government has allowed 100 per cent FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India. 

In single brand retail trading, government has decided to relax local sourcing norms up to three years, along with relaxed sourcing regime for another five years for entities undertaking trading of products with state of art and cutting edge technology. This is the second major reform after the last radical changes announced in November last year.

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. 

In last two years, government has brought major FDI policy reforms in a number of sectors, including Defence, Construction Development, Insurance, Pension Sector and Broadcasting Sector. Measures undertaken by the Government have resulted in increased FDI inflows at 55.46 billion dollars in the last financial year, as against 36.04 billion dollars during the financial year 2013-14.

Commerce Minister Nirmala Sitharaman has said today's decision is aimed at giving clear direction to FDI flows with an obejctive to make India a manufacturing hub. Briefing reporters in New Delhi, she said that it will help in creating more jobs by promoting Make in India scheme. #casansaar 

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