Government of India
Ministry of Commerce & Industry
Department of Industrial Policy & Promotion
SIA (FC Division)

Press Note No.2 (2000 Series)

 Subject : Expansion of list of industries/activities eligible for automatic route for Foreign Direct Investment (FDI), Non Resident Indian (NRI) and Overseas Corporate Body (OCB) investment.

In pursuance of Government’s commitment to early implementation of the second phase of the economic reforms and with a view to further liberalising the FDI regime, Government, on review of the policy on FDI, has decided to place all items / activities under the automatic route for FDI/NRI and OCB investment except the following : 

  1. All proposals that require an Industrial Licence which includes (i) the item requiring an Industrial Licence under the Industries (Development and Regulation) Act, 1951; (ii) foreign investment being more than 24% in the equity capital of units manufacturing items reserved for small scale industries; and (iii) all items which require an Industrial Licence in terms of the locational policy notified by Government under the New Industrial Policy of 1991.
  1. All proposals in which the foreign collaborator has a previous venture/tieup in India. The modalities prescribed in Press Note No. 18 dated 14.12.98 of 1998 series, shall apply in such cases. 
  1. All proposals relating to acquisition of shares in an existing Indian company in favour of a foreign/NRI/OCB investor. 
  1. All proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permitted and/or whenever any investor chooses to make an application to the FIPB and not to avail of the automatic route.

2. All proposals for investment in public sector units as also for EOU/EPZ/ EHTP/STP units would qualify for automatic route subject to the above parameters. 

3. The modalities and procedures for automatic route would remain the same and RBI would continue to be the concerned agency for monitoring/reporting as per existing procedure. The National Industrial Classification of all Economic Activities (NIC), 1987, shall remain applicable for description of activities and classification for all matters relating to FDI/NRI/OCB investment.

4. FDI/NRI/OCB investment under the automatic route shall continue to be governed by the notified sectoral policy and equity caps and RBI shall ensure compliance with the same.

5. Areas/sectors/activities hitherto not open to FDI/NRI/OCB investment shall continue to be so unless otherwise decided and notified by Government.

6. Henceforth, any change in sectoral policy/sectoral equity cap shall be notified by the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion.

7. Press Note No. 2 (1997 Series), Press Note No. 14 (1997 Series), Press Note No. 2 (1998 Series) and Press Note No. 1 (1999 Series) stand superseded to the extent as aforesaid.

                                                                                               

(ASHOK KUMAR)

Joint Secretary to the Government of India

No.7(4)/2000-IP dated 11th February 2000

___________________________________________________________________

SECTOR SPECIFIC GUIDELINES FOR FOREIGN DIRECT INVESTMENT(FDI) IN MINING AND MINERAL SECTOR AS PER PRESS NOTE NO.2 OF 2000 DATED 11.2.2000 AND PRESS NOTE NO. 7 OF 2000 DATED 14.7.2000

 FDI Policy for  non -fuel and non- atomic minerals.

  1. For exploration and mining of diamonds and precious stones FDI is allowed up to 74% under automatic route.
  2. For exploration and mining of gold and silver and minerals other than diamonds and precious stones, metallurgy and processing,  FDI is allowed up to 100% under automatic route.
  3. Press Note No. 18 (1998 series) dated 14.12.98 would not be applicable for setting up 100% owned subsidiaries in so far as the mining sector is concerned, subject to a declaration from the applicant that he has no existing joint venture for the same area and / or the particular mineral.

  For further sector specific queries on FDI, contact: Ministry of Mines, Government of India (website: http://www.nic.in/mines)

FDI Policy for   fuel minerals

(i) Petroleum
(other than Refining)

  1. Under the exploration policy, FDI up to 100% is allowed for small fields through competitive bidding; up to 60% for unincorporated JV; and up to 51% for incorporated JV with a No Objection Certificate for medium size fields.
  2. For petroleum products and pipeline sector, FDI is permitted upto 51%.
  3. FDI is permitted upto 74% in infrastructure related to marketing and marketing of petroleum products.
  4. 100% wholly owned subsidiary(WOS) is permitted for the purpose of market study and formulation.
  5. 100% wholly owned subsidiary is permitted for investment/financing.
  6. For actual trading and marketing, minimum 26% Indian equity is required over 5 years.

The automatic route is not available.

 Petroleum

(Refining)

  1. FDI is permitted upto 26% in case of public sector units(PSUs). PSUs will hold 26% and balance 48% by public. Automatic route is not available.
  2. In case of private Indian companies, FDI is permitted up to 100% under automatic route.

For further sector specific queries on FDI, contact: Ministry of Petroleum and Natural Gas, Government of India( website: http://petroleum.nic.in)

. (ii)Coal and Lignite

  1. Private Indian companies setting up or operating power projects as well as coal or lignite mines for captive consumption are allowed FDI up to 100%.
  2. 100% FDI is allowed for setting up coal processing plants,  subject to the condition that the company shall not do coal mining and shall not sell washed coal or sized coal from its coal processing plants in the open market and shall supply the washed or sized coal to those parties who are supplying raw coal to coal processing plants for washing or sizing.
  3. FDI up to 74% is allowed for exploration or mining of coal or lignite for captive consumption.
  4. In all the above cases, FDI is allowed up to 50% under the automatic route subject to the condition that such investment shall not exceed 49% of the equity of a PSU.

For further sector specific queries on FDI, contact: Ministry of Coal, Government of India (web site: http://coal.nic.in

FDI Policy for  atomic minerals

The following three activities are permitted to receive FDI/NRI/OCB investments through FIPB (as per detailed guidelines issued by Department of Atomic Energy vide Resolution No.8/1(1)/97-PSU/1422 dated 6.10.98):

  1. Mining and mineral separation
  2. Value addition per se to the products of (a) above
  3. Integrated activities (comprising of both (a) and (b) above.

The following FDI participation is permitted:

  1. Upto 74% in both pure value addition and integrated projects.
  1. For pure value addition projects as well as integrated projects with value addition upto any intermediate stage, FDI is permitted up to 74% through joint venture companies with Central/State PSUs in which equity holding of at least one PSU is not less than 26%.
  2. In exceptional cases, FDI beyond 74% will be permitted subject to clearance of the Atomic Energy Commission before FIPB approval.

For further sector specific queries on FDI, contact: Department of Atomic Energy, Government of India. (web site: http://www.dae.gov.in)

TOP