GOI introduces liberal and transparent policy for FDI

Ministry of Commerce & Industry

Press Release

21th SEP 2020

Government has put in place a liberal and transparent policy for Foreign Direct Investment (FDI), wherein most of the sectors are open to FDI under the automatic route. The Government reviews the FDI policy on an ongoing basis and makes changes from time to time, to ensure that India remains an attractive & investor friendly destination. It has been the endeavor and intent of the Government to put in place an enabling and investor friendly FDI Policy.

FDI policy is an enabling policy which is uniformly applicable in the country across all scales of industries including small and medium enterprises.

Details of Foreign Direct Investment is maintained remittance-wise. The Foreign Direct Investment Equity Inflow data inter-alia includes the name of the Foreign company, Indian company including MSMEs, country, sector activity, amount and type of investment, etc. This data is very voluminous and available on the departmental website (www.dipp.nic.in).

India has one of the most liberalized FDI policy worldwide, wherein 100% FDI under automatic route is permitted in many sectors/ activities. There are only a few sectors/ activities where FDI is regulated i.e. subjected to government approval, with a cap or having other conditionality requirements. The FDI policy equally applies to the MSME sector. Further, the Government reviews the FDI policy on an ongoing basis and significant changes are made in the FDI policy regime, from time to time, to ensure that India remains increasingly attractive and is viewed as an investor-friendly investment destination. A liberalised FDI Policy is being pursued to ensure that along with attracting investment, modern and cutting edge technology is brought in the country to improve overall productivity and competitiveness.

Further, the extant FDI Policy on Single Brand Product retail trading contributes significantly to the development of MSME sector thereby encouraging increased sourcing of goods from India, thereby enhancing competitiveness of Indian MSMEs, providing access to global designs, technologies and management practices.

FDI Policy on Single Brand Product retail trading, in case of proposals involving foreign investment beyond 51%, mandates sourcing of 30% of the value of goods procured, to be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors.

Further, the FDI Policy on Multi Brand Retail Trading provides that, at least 30% of the value of procurement of manufactured/processed products purchased shall be sourced from Indian micro, small and medium industries, which have a total investment in plant & machinery not exceeding US $ 2.00 million.

This information was given by the Union Minister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

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