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Increase of FDI limit to 100 % notified

The government on Monday notified increase in foreign direct investment limit to 100 per cent in power, e-commerce and refining sectors and removal of dividend balancing clause for consumer goods industries.

The proposal to remove the FDI cap in these sectors, which evoked strong opposition from both RSS and Swadeshi Jagran Manch, was cleared by the Union Cabinet last month.

FDI up to 100 per cent would be allowed in e-commerce subject to the condition that the company would divest 26 per cent to public within five years if it was already listed abroad, an official release said.

The FDI would also be subject to the condition that companies would engage only in business to business e-commerce (B2B) and not in retail trading.

The removal of dividend balancing clause for consumer goods industries would come into effect from Monday.

As per dividend balancing clause, it was mandatory for consumer goods industries to balance foreign exchange outgo on account of dividend payments through exports.

The government has also removed the Rs 1.5-billion limit on 100 per cent FDI in projects relating to electric generation, transmission and distribution.

Earlier, automatic approval for 100 per cent FDI in generation, transmission and distribution was allowed provided the project cost did not exceed Rs 1.5 billion Automatic approval limit for FDI in oil refining has also been increased from 49 per cent to 100 per cent, the release said.

PTI

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