fdiThe Union Cabinet has given approval to proposal for review of foreign direct investment (FDI) for various sectors.

As per the present FDI policy, under coal mining 100 percent FDI under automatic route is allowed for coal and lignite mining for captive consumption by power projects, iron and steel and cement units and other eligible activities permitted under and subject to applicable laws and regulations.

Further, a 100 percent FDI under automatic route is also sanctioned for setting up coal processing plants like washeries, but subject to the condition that the company will not do coal mining and not sell washed coal or sized coal from its coal processing plants in the open market. It will supply the washed or sized coal to those parties who are supplying raw coal to coal processing plants for washing or sizing.

Also, the government has decided to permit 100 percent FDI under automatic route for sale of coal for coal mining activities, including associated processing infrastructure subject to provisions of Coal Mines (special provisions) Act 2015 and the Mines and Minerals (development and regulation) Act 1957 as amended from time to time, and other relevant acts on the subject.

Under contract manufacturing, the extant FDI policy provides for 100 percent FDI under automatic route in the manufacturing sector. The Centre has decided to allow 100 percent FDI under automatic route in contract manufacturing in India. Manufacturing activities can be conducted either by the investee entity or through contract manufacturing in India under a legally tenable contract, whether on Principal to Principal or Principal to Agent basis.

Under the Single Brand Retail Trading (SBRT) the extant of FDI Policy provides 30 percent of value of goods has to be procured from India if SBRT entity has FDI more than 51 percent. In order to offer flexibility and ease of operations to SBRT entities, the Cabinet has decided all procurements made from India by the SBRT entity for that single brand will be counted towards local sourcing, irrespective of whether the goods procured are sold in India or exported.

The current cap of considering exports for five years is proposed to be removed to give an impetus to exports.

The extant policy provides that as regards local sourcing requirement, incremental sourcing for global operations by the non-resident entities undertaking single brand retail trading, either directly or through their group companies, will also be counted towards local sourcing requirement for the first five years.

The sourcing of goods from India for global operations can be done directly by the entity undertaking SBRT or its group companies (resident or non-resident), or indirectly by them through a third party under a legally tenable agreement.

The extant policy allows only that part of global sourcing will be counted towards local sourcing requirement which is over and above the previous year’s value.

The Cabinet has allowed entire sourcing from India, for global operations will be considered towards local sourcing requirement. Also, retail trading through online trade can be undertaken prior to opening of brick and mortar stores, but subject to the condition that the company opens brick and mortar stores within two years from the date of start of online retail.

The extant policy allows 49 percent FDI under approval route in up-linking of news and current affairs TV channels and the government decided to permit 26 percent FDI under government route for uploading/ streaming of news and current affairs through digital media, on the lines of print media.


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