Lok Sabha Question No. 1324 (UNSTARRED), answered on 2017-07-24
Subject: Foreign Direct Investment
Ministry: COMMERCE AND INDUSTRY
Asked by: UDAY PRATAP SINGH, SATYA PAL SINGH, RAHUL RAMESH SHEWALE, SANJAY SHAMRAO DHOTRE, DILIP PATEL, INNOCENT, RAJESH PANDEY, PARAYAMPARANBIL KUTTAPPAN BIJU

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION

## LOK SABHA

UNSTARRED QUESTION NO. 1324. TO BE ANSWERED ON MONDAY, THE  24 TH  JULY, 2017.

## FOREIGN DIRECT INVESTMENT

## 1324.  SHRI UDAY PRATAP SINGH:

DR. SATYAPAL SINGH:

SHRI RAHUL SHEWALE:

SHRI SANJAY DHOTRE:

SHRI DILIP PATEL:

SHRI INNOCENT:

SHRI RAJESH PANDEY:

SHRI P.K. BIJU:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

## वाणिज् यवव द्यग ं ्री

- (a) the  details  of  the  Foreign  Direct  Investment  proposals  received  and  sanctioned  for establishment of industrial units in India under the new economic reforms and 'Make in India' programme by foreign companies during each of the last three years and the current year, sector-wise, country/company-wise;
- (b) whether the Government has entered into any agreement with the said companies under  the  'Make  in  India'  programme  and  if  so,  the  details  thereof  along  with  the steps taken by the Government to attract more FDI to accelerate the 'Make in India' programme in the country;
- (c) whether  the  Foreign  Direct  Investment  (FDI)  have  increased  in  the  country  during each of the last three years and the current year;
- (d) if  so,  the  details  thereof  and  if  not,  the  reasons  therefor  along  with  the  number  of cases of violation of FDI norms forwarded to the Directorate of Enforcement (DoE) for investigation during the said period, country/company/case-wise;  and
- (e) the  existing  mechanism  to  monitor  the  compliance  of  the  prescribed  norms  by  the companies  for  FDI  in  India  along  with  the  other  steps  taken/being  taken  by  the Government to ease the process of FDI in India and to ensure compliance of FDI norms by the companies?

## ANSWER

## वाणिज् यवव द्यग ााज् यं ्रीस् वतं ््रभााा(स्रींतंरीनिंमलासरीतंाांि( THE MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF COMMERCE & INDUSTRY (SHRIMATI NIRMALA SITHARAMAN)

- (a) & (b): Make  in  India  is  not  a  specific  programme  but    a  major  national  initiative, designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build best-in-class manufacturing infrastructure.

No  programme/initiative  based  data  of  Foreign  Investment proposals  is centrally maintained.

To promote Foreign Direct Investment (FDI), the Government has put in place an  investor-friendly  policy,  wherein  except  for  a  small  negative  list,  most sectors are open for 100% FDI under the Automatic route. Further, the policy on FDI is reviewed on an ongoing basis, to ensure that India remains attractive & investor  friendly  destination.  The  Government  has  taken  a  number  of  FDI Policy reforms, which are not only bold but also historic. The measures taken by  the  Government  were  directed  to  open  new  sectors  FDI,  increase  the sectoral  limit  of  existing  sectors  and  simplifying  other  conditions  of  the  FDI policy. These policy reforms are meant to provide ease of doing business and accelerate  the  pace  of  foreign  investment  in  the  country.    Details  of  policy reforms taken by the Government in this regard since August, 2014 is given at Annexure -I.

- (c) & (d): Yes,  Madam.  A  statement  of  FDI  Inflow  during  the  last  three  years  and  the current  year  is  at Annexure  -II .  No  data  with  regard  to  number  of  cases  of violation  of  FDI  norms  forwarded  to  the  Directorate  of  Enforcement  for investigation is centrally maintained.
- (e): After abolition of Foreign Investment Promotion Board (FIPB) from 24 th May, 2017, the work of monitoring of the compliance of conditions under the FDI approvals,  including  the  past  cases  approved  by  erstwhile  FIPB,  has  been assigned  to  the  concerned  Administrative  Ministries/Departments.  Further, violation  of  FDI  regulations  is  covered  by  the  penal  provisions  of  Foreign Exchange Management Act (FEMA). Reserve Bank of India (RBI) administers the FEMA and Directorate of Enforcement under the Ministry of Finance is the authority for the enforcement of FEMA. The Directorate takes up investigation in any contravention of FEMA.

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## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  &  (b)  OF  LOK  SABHA UNSTARRED QUESTIOIN NO. 1324 FOR ANSWER ON 24 TH  JULY, 2017.

## FDI Policy Reforms since August, 2014

-  Investment  made  by  NRIs,  PIOs  and  OCIs  under  Schedule  4  of  FEMA  (Transfer  or  Issue  of Security  by  Persons  Resident  Outside  India)  Regulations  on  non-repatriation  basis  is  now deemed to be domestic investment at par with the investment made by residents.
-  The special dispensation of NRIs has also been extended to companies, trusts and partnership firms, which are incorporated outside India and are owned and controlled by NRIs.
-  In order to provide simplicity to the FDI policy and bring clarity on application of conditionalities and approval requirements across various sectors, different kinds of foreign investments have been made fungible under one composite cap.
-  FDI up to 100% through automatic route has been allowed in White Label ATM Operations.
-  Reforms in FDI Policy on Construction Development sector include:
-  Removal of conditions of area restriction and minimum capitalization to be brought in within the period of six months of the commencement of business.
-  Exit  and  repatriation  of  foreign  investment  is  now  permitted  after  a  lock-in-period  of  three years. Transfer of stake from one non-resident to another non-resident, without repatriation of investment  is  also  neither  to  be  subjected  to  any  lock-in  period  nor  to  any  government approval.
-  Exit is permitted at any time if project or trunk infrastructure is completed before the lock-in period.
-  100%  FDI  under  automatic  route  is  permitted  in  completed  projects  for  operation  and management of townships, malls/ shopping complexes and business centres.
-  Foreign investment up to 49% in defence sector has been permitted under automatic route along with specified conditions.  Foreign  investment  beyond  49%  has  been  permitted  through government  approval  in  cases  resulting  in  access  to  modern  technology  in  the  country  or  for other  reasons  to  be  recorded.  Further,  FDI  limit  for  defence  sector  has  also  been  made applicable to Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959.
-  Sectoral cap on Broadcasting sector has been raised across various activities as follows:
-  74% to 100% in Teleports, DTH, Cable Networks (Digital), Mobile TV, HITS
-  26% to 49% for FM Radio, up-linking of news and current affairs
-  49% to 100% for Cable Networks (not undertaking digitisation)
-  FDI route for Teleports, DTH, Cable Networks (Digital), Mobile TV, HITS, Cable Networks (not undertaking digitisation), and Up-linking of Non- 'news and current affairs' and down-linking of channels has been changed to automatic route.
-  Full fungibility of foreign investment has been introduced in Banking-Private sector. Accordingly, FIIs/FPIs/QFIs, following due procedure, can now invest up to sectoral limit of 74%.
-  Certain  plantation  activities  namely  coffee,  rubber,  cardamom,  palm  oil  tree  and  olive  oil  tree plantations have been opened for 100% foreign investment under automatic route.
-  A manufacturer has been permitted to sell its product through wholesale and/or retail, including through e-commerce under automatic route.
-  Government has reviewed single brand retail trading (SBRT) FDI policy to provide that sourcing of 30% of the value of goods purchased would be reckoned from the opening of first store. In case  of  entities  undertaking  Single  Brand  Retail  Trading  of  products  having  'state  of  art'  and 'cutting edge' technology and where local sourcing is not possible, sourcing norms have been relaxed up to three years for entities undertaking Single Brand Retail. Further, an entity operating SBRT through brick and mortar stores has been permitted to undertake e-commerce activities as well.
-  Indian brands are equally eligible for FDI to undertake SBRT. In this regard, it has been provided that  certain  conditions  of  the  FDI  policy  on  the  sector  namely-  products  to  be  sold  under  the same brand internationally and investment by non-resident entity/ entities as the brand owner or

under legally tenable agreement with the brand owner, will not be made applicable in case of FDI in Indian brands.

-  100% FDI is now permitted under automatic route in Duty Free Shops located and operated in the Customs bonded areas.
-  FDI policy on wholesale cash & carry activities has been reviewed to provide that a single entity will be permitted to undertake both the activities of SBRT and wholesale.
-  100%  FDI  is  now  permitted  under  the  automatic  route  in  Limited  Liability  Partnerships (LLP) operating in sectors/activities where 100% FDI is allowed, through the automatic route and there are  no  FDI-linked  performance  conditions.  Further,  the  terms  'ownership  and  'control'  with reference to LLPs have also been defined.
-  Regional Air Transport Service has been opened for foreign investment up to 100%, with 49% under automatic route, and beyond that through government approval route. Foreign equity cap of  activities  of  Scheduled  Air  Transport  Service/  Domestic  Scheduled  Passenger  Airline  has been increased from 49% to 100%, with 49% under automatic route, and beyond that through government  approval  route.  Further,  foreign  equity  cap  of  activities  of  Non-Scheduled  Air Transport Service, Ground Handling Services have been increased from 74% to 100% under the automatic route.
-  With a view to aid in modernization of the existing airports to establish a high standard and help ease the pressure on the existing airports, 100% FDI under automatic route has been permitted in Brownfield Airport projects.
-  Foreign  investment  cap  on  Satellites-  establishment  and  operation  has  now  been  raised  from 74% to 100% under the government route.
-  Foreign investment cap on Credit Information Companies has now been increased from 74% to 100% under the automatic route.
-  In order to achieve faster approvals on most of the proposals, the Government has raised the threshold limit for approval by FIPB to Rs. 5000 crore.
-  FDI Policy on Insurance and Pension sector has been reviewed to permit foreign investment up to 49% under the automatic route.
-  In order to provide clarity to the e-commerce sector, the Government has issued guidelines for foreign investment in the sector. 100% FDI under automatic route is permitted in the marketplace model of e-commerce.
-  With  an  objective  of  increase  investment  in  the  country,  100%  FDI  in  Asset  Reconstruction Companies has been allowed under automatic route.
-  100% FDI under government approval route has been permitted for trading, including through ecommerce, in respect food products manufactured and/or produced in India.
-  In  Pharmaceutical  sector,  with  the  objective  of  making  the  sector  more  attractive  to  foreign investors, 74% FDI under automatic route has been permitted in brownfield pharmaceuticals. FDI beyond 74% will be allowed through government approval route.
-  FDI limit for Private Security Agencies has been raised to 74%. FDI up to 49% is permitted under automatic  route  in  this  sector  and  FDI  beyond  49%  and  up  to  74%  would  be  permitted  with government approval.
-  For establishment of branch office, liaison office or project office or any other place of business in India  if  the  principal  business  of  the  applicant  is  Defence,  Telecom,  Private  Security  or Information and Broadcasting, it has been provided that approval of Reserve Bank of India would not  be  required  in  cases  where  FIPB  approval  or  license/permission  by  the  concerned Ministry/Regulator has already been granted.
-  As  per  FDI  Policy  2016,  FDI  in  Animal  Husbandry  (including  breeding  of  dogs),  Pisciculture, Aquaculture  and  Apiculture  was  allowed  100%  under  Automatic  Route  under  controlled conditions. This requirement of 'controlled conditions' for FDI in these activities has now been done away with.
-  Government has reviewed FDI policy on Other Financial Services and NBFCs to provide that foreign investment in financial services activities regulated by financial sector regulators such as RBI, SEBI, IRDA etc. will be 100% under the automatic route. In financial services, which are not regulated by any financial sector regulator or where only part of the financial service activity is regulated or where there is doubt regarding regulatory oversight, foreign investment upto 100% will be allowed under the government approval route.
-  Government  has  reviewed  conditionalities  for  foreign  investment  by  FPIs  in  Indian  Stock Exchanges.

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ANNEXURE  REFERRED  TO  IN  REPLY  TO  PARTS  (c)  &  (d)  OF  LOK  SABHA UNSTARRED QUESTIOIN NO. 1324 FOR ANSWER ON 24 TH  JULY, 2017.

Details of Total FDI inflow for the last three Financial Year (2014-15, 2015-16, 2016-17) and current financial year 2017-18 (upto May, 2017) are as under:-

|   Sl. No. | Financial Year           |   Total FDI inflow (in US$ billion ) | Annual Growth   |
|-----------|--------------------------|--------------------------------------|-----------------|
|         1 | 2014-15                  |                                45.15 | 25% ^           |
|         2 | 2015-16                  |                                55.56 | 23%             |
|         3 | 2016-17                  |                                60.08 | 8%              |
|         4 | 2017-18 (upto May, 2017) |                                10.02 | 23% *           |

All figures are provisional subject to reconciliation with RBI. ^ Compared with figures of Financial Year 2013-14 i.e. US$ 36.05 billion. * Compared with figures of upto May, 2016 i.e.  US$ 8.12 billion.

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