Sector

Investment Cap

Description of Activity/ Items/ conditions

FDI/NRI investments allowed in the following 19 NBFC activities shall be as per the levels indicated below:

 (a)  Activities covered: 

1.       Merchant Banking

2.       Under Writing

3.       Portfolio Management Services

4.       Investment Advisory Services

5.       Financial Consultancy

6.       Stock-broking

7.       Asset Management

8.       Venture Capital

9.       Custodial Services

10.   Leasing & Finance

11.   Housing Finance

12.   Forex-broking

13.   Credit Card Business

14.   Money-changing Business

15.   Micro-credit

16.   Rural credit

 (b)  Minimum Captilisation    norms for fund based (NBFCs)

 (i)    For FDI upto 51%, US $ 0.5 million to be brought in upfront

(ii)   If the FDI is above 51% and upto 75%, US $ 5 million to be brought upfront

(iii) If the FDI is above 75% and upto 100%, US $ 50 million out of which US $ 7.5 million to be brought in upfront and the balance in 24 months.

(c)   Minimum Capitalization norms for non-fund based activities

 Minimum Capitalization norm of US $ 0.5 million is applicable in respect of non-fund based NBFCs with foreign investment.

(d)  Foreign Investors can set up100%  operating subsidiaries without the condition to disinvest a mininim of 25% of its equity to India entities, subject to bringing in US $ 50 million as at (b) (iii) above without any restrictions on number of operating subsidiaries without bringing in additional capita).

(f)  FDI in the NBFC sector is put on automatic route subject to compliance with guidelines of the Reserve Bank of India.  RBI would issue appropriate guidelines in this regard.

i) in Basic, Cellular, Value Added Services and Global Mobile Personal Communications by Satellite, FDI is limited to 49% subject to licensing and security requirements and adherence by the companies (who are investing and companies in which the investment is being made) to the license conditions for foreign equity cap and lock-in-period for transfer and addition of equity and other license provisions.

(ii) ISPs with gateways, radio paging and end-to-end bandwidth, FDI is permitted upto 74% with FDI, beyond 49% requiring Government approval.  These services would be subject to licensing and security requirements.

(iii)No equity cap is applicable to manufacturing activities.

(iv)FDI upto 100% is allowed for the following activities in the telecom sector:

 (a)  ISPs not providing gateways (both for satellite and submarine cables)

(b)  Infrastructure providers providing dark fiber (IP category I)

(c )  Electronic Mail, and

(d)  Voice Mail.

The above would be subject to the following conditions:

(a) FDI upto 100% is allowed subject to the condition that such companies would divest 26% of their equity in favour of Indian public in 5 years, if these companies are listed in other parts of the World.

(b) The above services would be subject to licensing and security requirements, wherever required.

(c) Proposal for FDI beyond 49% shall be considered by FIPB on case-to-case basis.

Only NRIs are allowed to invest upto 100% in the areas listed below:

(i)Development of serviced plots and construction of built-up residential premises.

(ii)Investment in real estate covering construction of residential and commercial premises including business centers and offices

(iii) Development of townships

(iv)City and regional level urban infrastructure facilties including both roads and bridges

(v)Investment in manufactured of building materials

(vi)Investment in participatory ventures in (a) to (c) above

(vii)Investment in Housing Finance Institutions, which is also opened to FDI as an NBFC.

1.  Private Indian companies setting up or operating power projects as well as coal and lignite mines for captive consumption are allowed FDI upto 100%

2.  100% FDI is allowed for setting up coal processing plans subject to the condition that the company shall not do coal mining and shall not sell washed coal or sized coal from its coal processing plants in the open market and shall supply the washed or sized coal to those parties who are supplying raw coal to coal processing plants for washing or sizing.

3.  FDI upto 74% is allowed for exploration or mining of coal or lignite for captive consumption

4.  In all the above cases, FDI is allowed upto 50% under the automatic route subject to the condition that such investment shall not exceed 49% of the equity of a PSU.

Trading is permitted under automatic route upto 51% provided it is primarily export activities and the undertaking is an export house/trading house/super trading house/star trading house. However, under the FIPB route:

(i)  100% FDI is permitted in case of trading companies for the following activities:

(a)  Exports

(b)  Bulk imports with export/expanded ware house sales

(c)  cash and carry wholesale trading

(d)  other import of goods or services provided at least 75% is for procurement and sale of the same group and not for third party use.

(ii) The following kinds of trading are also permitted subject to provisions of Exim policy:

(a)  Companies for providing after sales  services (that is not trading per se)

(b) Domestic trading of products of JVs is permitted at the wholesale level for such trading companies who wish to market manufactured products on behalf of their Joint Ventures in which they have equity participation in India.

(c)  Trading of hi-tech items/items requiring specialized after sales service  

(d)  Trading of items for social sector

(e)  Trading of hi-tech medical and diagnostic items

(f)  Trading of items sourced from teh same scale sector under which, based on technology provided and laid down quality specifications, a company can market that item under its brand name

(g)  Domestic sourcing of products for exports

(h)  Test marketing of such items for which a company has approval for manufacture provided such test marketing faciltiy will be for a period of two years and investment in setting up manufacturing facilities commence simultaneously with test marketing.

(i)  FDI upto 100% permitted for e-commerce activities subject to the condition that such companies would divest 26% of their equity in favour of the Indian public in five years, if these companies are listed in other parts of the world.  Such companies would engage only in business (B2B) e-commerce and not in retail trading.

FDI permitted upto 100% for manufacture of drugs and pharmaceuticals provided the activity does not attract compulsory licensing or involve use of recombinant DNA technology and specific cell/tissue targeted formulations.

FDI proposal for the manufacture of       licensable drugs and pharmaceuticals and bulk drugs produced by recombinant DNA technology and specific cell/issue targeted formulations will require prior Government approval.

The term hotels include restaurants, beach resorts, and other tourist complexes providing accommodation and/or catering and food facilities to tourists.  Tourism related industry includes travel agencies, tour operating agencies and tourist transport operating agencies, units providing facilities for cultural, adventure and wild life experience to tourists, surface, air and water transport facilities to tourists leisure, entertainment amusement, sports, and health units for tourists and convention/Seminar units and organizations. 

For foreign technology agreements, automatic approval is granted if-

(a)  Upto 3% of the capital cost of the project is proposed to be paid for technical and consultancy services including fees for architects designs, supervision etc.

(b)  Upto 3% of the net turnover is payable for franchising and marketing/publicity support fee, and 

(c)  Upto 10% of gross operating profit is payable for management fee, including incentive fee.

(ii)  For exploration and mining of gold and silver and minerals other than diamonds and precious stones, metallurgy and processing FDI is allowed utp 100% under automatic route.

(iii)  Press note 18 (1998 series) dated 14.12.1998 would not be applicable for setting up 100% owned subsidiaries i so far as the remaining sector is concerned subject to a declaration from the applicant that he has no existing joint venture for the same area and or the particular mineral.

(i)  Arms and ammunition, Explosives and allied items of defense equipments, Defense aircrafts and warships.

(ii)  Atomic substances, Narcotics and Psychotropic Substances and Hazardous Chemicals

(iii)  Distillation and brewing of Alcoholic drinks and 

(iv)  Cigarette/cigars and manufactured tobacco substitutes