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India – RBI Notifies New FDI Policy For Railways Infrastructure & Defence Sector.

 

15 December, 2014

 

 

The Reserve Bank of India (“RBI”) has recently notified the Government of India’s decision to permit 100% foreign direct investment (“FDI”) in railways infrastructure (effective August 27, 2014), and increase FDI in the defence sector (effective August 26, 2014) as under:

 

Sl. No.

Sector/Activity

% of Equity/ FDI Cap

Entry Route

18

Railway Infrastructure
Construction, operation and maintenance of the following:
(i) Suburban corridor projects through PPP, (ii) speed train projects, (iii) Dedicated freight lines, (iv) Rolling stock including train sets, and locomotives/coaches manufacturing and maintenance facilities, (v) Railway Electrification, (vi) Signaling systems, (vii) Freight terminals, (viii) Passenger terminals (ix) Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivities to main railway line, and (x) Mass Rapid Transport Systems.

100%

Automatic

Note: FDI in the abovementioned activities open to private participation is subject to sectoral guidelines of Ministry of Railways. Further, proposals involving FDI beyond 49% in sensitive areas from a security point of view will be brought before the Cabinet Committee on Security (“CCS”) for consideration on a case to case basis.

6

Defence

6.1

Defence Industry subject to Industrial license under the Industries (Development & Regulation) Act, 1951.*Note: The limit of 49% is composite and includes all kinds of foreign investments, i.e., FDI, foreign institutional investors (“Flls”), foreign portfolio investors (“FPIs”), non-resident Indians (“NRIs”), foreign venture capital investors (“FVCI”) and qualified foreign investors (“QFIs”). Further, portfolio investment by FPIs/FIls/NRIs/QFIs and investments by FVCIs together will not exceed 24% of the total equity of the investee/joint venture company. Portfolio investments will be under the automatic route.

 

Additional conditions for the investee company have been separately specified.

49%

Government approval up to 49%.Above 49%, brought to the CSS on a case to case basis, wherever it is likely to result in access to modern and “state-of-art” technology in the country.

 

* The Department of Industrial Policy and Promotion has provided a list of defence items @ http://dipp.nic.in/English/acts_rules/Press_Notes/pn3_2014.pdf as finalised by the Department of Defence Production, Ministry of Defence, and has clarified that items not in the list would not require industrial license for defence purposes. Dual use items, having military as well as civilian applications, other than those specially mentioned in the list, would also not require Industrial License from a defence angle.

 

LexCounsel

 

For further information, please contact:

 

Alfred Adebare, Lex Counsel Law Offices

aadebare@lexcounsel.in


Energy & Project Finance Law Firms in India



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