India eases foreign equity norms for defence, aviation, retail sectors

India eases foreign equity norms for defence, aviation, retail sectors


The Centre on Monday relaxed its foreign equity norms further, notably in defence, aviation, pharmaceuticals and retailing, with automatic approval rather than a case-based route as the preferred model.

In aviation, extant policy is allowed up to 49% foreign equity in scheduled airlines under the automatic route. Now, while the cap has been raised to 100%, up to 49% would be under automatic and beyond that will be under the government approval routes, said officials.

In pharmaceuticals, both greenfield and brownfield projects could get 100% foreign capital, but with an automatic route for the former and government route for the latter. Now, brownfield projects, too, will come under automatic route for up to 74%.

“The government has radically liberalised the foreign direct investment (FDI) regime, with the objective of providing major impetus to employment and job creation,” said an official statement.

The decision was taken at a high-level meeting chaired by Prime Minister Narendra Modi. This is the second major reform after the last radical changes announced in November 2015. Now most of the sectors would be under automatic approval route, except a small negative list.

In defence manufacturing, the 49% norm under automatic approval will continue. But while looking at the proposals that call for investment beyond 49%, a condition that they will bring with them access to "state-of-the-art" technology has been done away with.

Commerce and Industry Minister Nirmala Sitharaman told reporters that the steps taken were in line with the idea of making India a preferred destination for industry with a focus on employment. She said investments shall be encouraged so that more jobs can be created.


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