Major Reforms in Foreign Direct Investment Policy

With a view to boost the ease of doing business in India and to further promote 'Make in India' and 'Startup India' initiatives, the Government published a Press Note on 10 November 2015, outlining significant reforms in the foreign direct investment (FDI) Policy.  The reforms are aimed at attracting more foreign investments through further easing, rationalising and simplifying the process of foreign investments in the country and putting more FDI proposals under automatic route.

The reforms have a multi-pronged effect:

1. Sectoral reform including construction development, retail trading, wholesale cash and carry, defence, broadcasting, banking, and plantation sectors.

2. Significant ease in establishing/ investing in Limited Liability Partnerships (LLPs) in India as well as downstream investment by such LLPs.

3. Bringing investments by non-resident Indian (NRI)-owned and controlled entities outside India on par with NRI investments.

4. Boosting e-commerce, including allowing e-commerce for manufacturing entities as well as for single brand retail trading entities.

5. A slew of rationalisation measures, including allowing swap of shares without prior approval, enhancement of the limit for Foreign Investmtent Promotion Board from INR 30 billion to INR 50 billion.  

The Department of Industrial Policy and Promotion has been advised to consolidate all FDI-related instructions contained in various notifications and press notes and prepare a consolidated booklet for easy reference by investors.