Sector

Guidelines

Banking

*FDI up to 49% from all sources is permitted in the banking sector on the automatic route subject to conformity with guidelines issued by RBI from time to time.

Non Banking Financial Companies (NBFC)

a) FDI/NRI/OCB investments allowed in the following 17 NBFC activities shall be as per levels indicated below

1. Merchant banking
2. Underwriting
3. Portfolio Management Services
4. Investment Advisory Services
5. Financial Consultancy
6. Stock Broking
7. Asset Management
8. Venture capital
9. Custodial Services
10. Factoring
11. Credit Reference Agencies
12. Credit rating Agencies
13. Leasing & Finance
14. Housing Finance
15. Forex Broking
16. Credit card business
17. Money changing Business

b) Minimum Capitalisation Norms for fund based NBFCsThe existing requirements to bring in capital would continue to be applicable. That is, if the

1. FDI is less than 51%, US$ 0.5 million to be brought in upfront;
2. FDI is more than 51% and upto 75%, US$ 5 million to be brought in upfront; and
3. FDI is more than 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.

Foreign investors can set up 100% operating subsidiaries without the condition to disinvest a minimum of 25% of its equity to Indian entities, subject to bringing in US$ 50 million as at (iii) above (without any restriction on number of operating subsidiaries without bringing in additional capital).

Joint Venture operating NBFCs that have 75% or less than 75% foreign investment will also be allowed to set up subsidiaries for undertaking other NBFC activities, subject to the subsidiaries also complying with the applicable minimum capital inflow, i.e. (i) and (ii) above.

c) Minimum capitalisation norms for non-fund based activities:Minimum capitalisation norm of US $ 0.5 million is applicable in respect of all permitted non-fund based NBFCs with foreign investment.

# 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.

Civil Aviation (detailed guidelines have been issued by Ministry of Civil Aviation)

In the domestic Airlines sector;

1. FDI upto 40% permitted subject to no direct or indirect equity participation by foreign airlines is allowed.
2. 100% Investment by NRIs/OCBs.
3. The automatic route is not available.

Telecommunications

1. In basic, Cellular Mobile, paging and Value Added services, and Global Mobile Personal Communications by Satellite, FDI is limited to 49% subject to grant of licence from Department of Telecommunications and adherence by the companies (who are investing and the companies in which investment is being made) to the licence conditions for foreign equity cap and lock in period for transfer and addition of equity and other licence provisions.

2. No equity cap is applicable to manufacturing activities.

3. *FDI up to 74% is permitted for the following telecom services subject to licensing and security requirements:(a) Internet service providers with gateways;(b) Radio paging; and (c) End-to-end bandwidth.Proposals with FDI beyond 49% shall require prior Government approval.