India eased foreign-direct investment rules on Monday, bolstering sentiment after a weekend announcement by Reserve Bank of India Governor Raghuram Rajan that he’ll leave the central bank dented confidence.
The government trumpeted the changes in a statement, saying India is "now the most open economy in the world for FDI" and that investment applications in most sectors can get automatic approval rather than requiring a green light from the administration. The last major changes in the regulations came in November 2015, according to the statement.
The adjustments now allow:
- 100 percent FDI via government approval in the trading of food products made or produced in India, including through the e-commerce route.
- More than 49 percent FDI in the defense sector via government approval, even if that investment doesn’t provide state-of-the-art technology, which was the earlier requirement.
- Automatic approval for 100 percent FDI in broadcasting activities such as cable networks and mobile television.
- Automatic approval for 74 percent FDI in existing pharmaceutical companies.
- Automatic approval for 100 percent FDI in existing airports.
- 100 percent foreign ownership of local airlines, with government permission required for investment beyond 49 percent; however, overseas carriers can still only hold 49 percent of a domestic carrier.
- Automatic approval for 49 percent FDI in private security agencies, and up to 74 percent with government approval.
- A relaxation of local sourcing requirements for companies, such as Apple Inc., seeking to sell a single brand in India: they’ll get a three-year grace period, while those that are selling cutting-edge products can get a relaxed sourcing regime for another five years.