Update on “Foreign Exchange Facilities for Individuals”

(As of October 2012)

S. No	Provision/topic	Reference in the book	Revised provision	Authority for revision/change
1	Prohibited foreign investment	Part III/6.1.3/ page 181	See annexure A that follows this table	Revised vide AP. Dir. Cir 45 dt. June 28th, 2012.
2	Sector specific investment policies	Annexure V, page 253	See annexure B that follows this table (replace Annexure V with annexure B)	Revised vide AP. Dir. Cir 45 dt. June 28th, 2012.
3	Booking of forward contracts for hedging by residents	Part II/1.12/ page 49	RBI extends flexibility in regard to rollover of contracts by switching AD Category banks on the maturity date of the contract, to all hedge transactions undertaken by residents	Revised vide AP. Dir. Cir. 3 dt. July 11, 2012.
4	Submission of Form A2 for drawal of foreign exchange	Part II/ 1.5 Documentation/ page 45 Annexure II/ page 100	See the revised Form A2 given below	Revised vide AP. Dir. Cir 5 dt. July 12, 2012
5	EEFC accounts Residents foreign currency Accounts in India	Part II/ 6.1.1/ page 79 Guidance Note/ page 234	credit of 100% foreign exchange earnings to the EEFC account allowed subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.	Revised vide AP. Dir. Cir 12 dt. July 31, 2012
6	Resident Foreign Currency (Domestic ) Accounts Residents foreign currency accounts in India	Part II/ 6.3/ page 81 Guidance Note/ page 234	100% foreign exchange earnings can be credited to the RFC(D) account subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.	Revised vide AP. Dir. Cir 12 dt. July 31, 2012
7	Process of compounding	Part IV/ 1.6.1/ page 213	Whenever a contravention is identified by the Reserve Bank or brought to its notice by the entity involved in contravention by way of a reference other than through the prescribed application for compounding, the Bank will continue to decide (i) whether a contravention is technical and/or minor in nature and, as such, can be dealt with by way of an administrative/ cautionary advice; (ii) whether it is material and, hence, is required to be compounded for which the necessary compounding procedure has to be followed or (iii) whether the issues involved are sensitive / serious in nature and, therefore, need to be referred to the Directorate of Enforcement (DOE). However, once a compounding application is filed by the concerned entity suo moto, admitting the contravention, the same will not be considered as ‘technical’ or ‘minor’ in nature and the compounding process shall be initiated in terms of section 15 (1) of Foreign Exchange Management Act, 1999 read with Rule 9 of Foreign Exchange (Compounding Proceedings) Rules, 2000.	AP. Dir. Cir 11 dt. July 31, 2012
8	Forward contracts-rebooking not permitted after cancellation	Part II/ 1.12/ Resident individuals/page 50	Under extant regulations, the facility of cancellation and rebooking is not permitted for forward contracts, involving Rupee as one of the currencies, booked by residents to hedge current and capital account transactions. Now exporters are allowed to cancel and rebook forward contracts to the extent of 25 percent of the contracts booked in a financial year for hedging their contracted export exposures.	Revised vide AP. Dir. Cir. 13 dt. July 31, 2012.
9	Foreign Direct Investment by citizens of Pakistan or by an entity incorporated in Pakistan	Part III/ 6.1.2/ page 180 6.1.4/ page 182 6.1.6/ page 183	Notwithstanding anything contained in sub-regulation (1) of Regulation 5 of the Notification No. FEMA. 20, a person who is a citizen of Pakistan or an entity incorporated in Pakistan may, with the prior approval of the Foreign Investment Promotion Board of the Government of India, purchase shares and convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1 of the Notification, ibid, provided further that notwithstanding anything contained in Schedule 1 of the Notification, ibid, the Indian company, receiving such foreign direct investment, is not engaged or shall not engage in sectors / activities pertaining to defence, space and atomic energy and sectors/ activities prohibited for foreign investment	Revised vide AP. Dir. Cir 16 dt. August 22, 2012
10	Prohibited transactions for citizens of Pakistan and for entities incorporated in Pakistan under FDI	Part III/ 6.1.3/ page 181	The entities are not allowed to invest in sectors/activities pertaining to defence, space and atomic energy. This is in addition to prohibition of investment in a company or a partnership firm or a proprietary concern or an entity, whether incorporated or not(such as Trusts) which is engaged or proposes to engage in the activities listed under 6.1.3	Revised vide AP. Dir. Cir 16 dt. August 22, 2012
11	Change in high risk and non-cooperative jurisdictions in connection with AML/KYC compliance –Money changing activities	Part II/ Annexure IV to Part II/ 4.10 (b)/ page 112	Non-cooperative jurisdictions now include Iran, Democratic Peoples’ Republic of Korea(DPRK) on which counter measures have to be applied. Other non-cooperative jurisdictions include Bolivia Cuba Ecuador Ethiopia Ghana Indonesia Kenya Myanmar Nigeria Pakistan São Tomé and Príncipe Sri Lanka Syria Tanzania Thailand Turkey Vietnam Yemen	AP. Dir. Cir 17 dt. August 23, 2012.
12	Change in high risk and non-cooperative jurisdictions in connection with AML/KYC compliance –Money Transfer Services Scheme	Part II/ Annexure V to Part II/ 5.10 (b)/ page 125	Non-cooperative jurisdictions now include Iran, Democratic Peoples’ Republic of Korea(DPRK) on which counter measures have to be applied. Other non-cooperative jurisdictions include Bolivia Cuba Ecuador Ethiopia Ghana Indonesia Kenya Myanmar Nigeria Pakistan São Tomé and Príncipe Sri Lanka Syria Tanzania Thailand Turkey Vietnam Yemen	AP. Dir. Cir 18 dt. August 23, 2012
13	Automatic fungibility of IDRs not permitted	Part II/ 7.4.1.1/ page 89	A limited two way fungibility for IDRs (similar to the limited two way fungibility facility available for ADRs/GDRs) now allowed subject to the following terms and conditions: i. The conversion of IDRs into underlying equity shares would be governed by the conditions mentioned in paras 6 and 7 of A.P. (DIR Series) Circular No. 5 dated July 22, 2009. ii. Fresh IDRs would continue to be issued in terms of the provisions of A.P. (DIR Series) Circular No. 5 dated July 22, 2009. iii. The re-issuance of IDRs would be allowed only to the extent of IDRs that have been redeemed /converted into underlying shares and sold. iv. There would be an overall cap of USD 5 billion for raising of capital by issuance of IDRs by eligible foreign companies in Indian markets. This cap would be akin to the caps imposed for FII investment in debt securities and would be monitored by SEBI.	AP. Dir. Cir 19 dt August 28, 2012.
14	Guarantees by non-residents for fund based facilities	Part III/1.6/ page 141	The facility of non-resident guarantee under the general permission for non-fund based facilities (such as Letters of Credit/guarantees/Letter of Undertaking (LoU) /Letter of Comfort (LoC) ) entered into between two persons resident in India is now permitted.	AP. Dir Cir 20 dt. August 29, 2012
15	Transfer or issue of any foreign security by a person resident in India	Part II/7.1.3/ page 85	Overseas direct investment by Indian Parties in Pakistan shall henceforth be considered under the approval route under Regulation 9 of the Notification, ibid.	AP. Dir. Cir 25 dt September 07, 2012
16	Drawal of foreign exchange-payment in Indian rupees Payment in rupees for buying foreign currency	Part II/ 2.1/© / page 54 Guidance Note/ page 233	For sale of foreign exchange to a person within his/her eligibility on single drawal, APs may receive payment only by crossed cheque drawn on the bank account of the applicant's firm / company sponsoring the visit of the applicant / Banker's cheque / Pay Order /Demand Draft / debit cards / credit cards / prepaid cards, if the rupee payment exceeds Rs.50,000/-. For sale of foreign exchange to a person within his/her eligibility through more than one drawal within 30 days or for a single journey/visit abroad, APs may receive second and subsequent payments only by crossed cheque drawn on the bank account of the applicant's firm/company sponsoring the visit of the applicant/Bank's cheque / Pay Order / Demand Draft / debit cards / credit cards / prepaid cards, if the total rupee payment, including payments on earlier drawal /s, exceeds Rs. 50,000/- on the second or subsequent drawals.	AP. Dir. Cir 33 dt. September 24, 2012
17	Purchase/transfer of shares and convertible debentures by a non-resident	Part III/6.3/ page 195 6.1.25/ page 190	In terms of sub-regulation (1) of Regulation 5 of the Notification ibid, a person resident outside India or an entity incorporated outside India may purchase shares or convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to compliance with the issue price specified in para 5 of Schedule 1 of the Notification ibid. It has been now permitted that in cases, where non-residents (including NRIs) make investment in an Indian company in compliance with the provisions of the Companies Act, 1956, by way of subscription to Memorandum of Association, such investments may be made at face value subject to their eligibility to invest under the FDI scheme.	AP. Dir. Cir 36 dt. September 26, 2012
18	Rupee loans in India/Loans against NRE/FCNR(B) Fixed Deposits Limit Rs. 100 lakhs	Part III/5.6/ page 171	Rupee loans to be allowed to depositor/third party without any ceiling subject to usual margin requirements	AP. Dir. Cir 44 dt October 12, 2012
19	Foreign currency loan in India/outside India/ Loans against NRE/FCNR(B) Fixed Deposits Limit Rs. 100 lakhs	Part III/ 5.7/ page 173	Foreign Currency loans to be allowed to depositor/third party without any ceiling subject to usual margin requirements	AP. Dir. Cir 44 dt October 12, 2012
20	Interest rates on NRE term deposits	Part III/ 2.1.10 ( iii ) ( a )/ page 147	With effect from the close of business in India on December 16, 2011, interest rates on Non-Resident (External) Rupee (NRE) Deposits are deregulated. Accordingly, banks are free to determine their interest rates on both term deposits of maturity of one year and above under Non-Resident (External) Rupee (NRE) Deposit accounts.	RBI/2012-13/75 DBOD.No.Dir.BC.1/13.03.00/2012-13 July 2, 2012
21	Interest rates on NRE SB accounts	Part III/ 2.1.10 ( ii )/ page 147	With effect from December 16, 2011, the interest rates are deregulated. However, interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee deposits	RBI/2012-13/75 DBOD.No.Dir.BC.1/13.03.00/2012-13 July 2, 2012

Annex. A ( as per serial number 1 )

[Annex to A. P. (DIR Series) Circular No. 45 dated June 28, 2012]

Sectors Prohibited for FDI.

FDI is prohibited in:

(a) Retail Trading (except single brand product retailing)

(b) Lottery Business including Government /private lottery, online lotteries, etc.

(c) Gambling and Betting including casinos etc.

(d) Business of Chit funds

(e) Nidhi company

(f) Trading in Transferable Development Rights (TDRs)

(g) Real Estate Business or Construction of Farm Houses

(h) Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes

(i) Activities / sectors not open to private sector investment e.g. Atomic Energy and Railway Transport (other than Mass Rapid Transport Systems).

Note: Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities. 4

Annex. B ( as per serial number 2 )

[Annex to A. P. (DIR Series) Circular No. 45 dated June 28, 2012]

Sector-specific policy for foreign investment

In the following sectors/activities, FDI up to the limit indicated against each sector/activity is allowed, subject to applicable laws/ regulations; security and other conditionalities In sectors/activities not listed below, FDI is permitted upto 100% on the automatic route, subject to applicable laws/ regulations; security and other conditionalities.

Wherever there is a requirement of minimum capitalization, it shall include share premium received along with the face value of the share, only when it is received by the company upon issue of the shares to the non-resident investor. Amount paid by the transferee during post-issue transfer of shares beyond the issue price of the share, cannot be taken into account while calculating minimum capitalization requirement.

Sl.No.	Sector/Activity	% of FDI Cap/Equity	Entry Route
AGRICULTURE
1	Agriculture & Animal Husbandry
a) Floriculture, Horticulture, Apiculture and Cultivation of Vegetables & Mushrooms under controlled conditions; b) Development and production of Seeds and planting material; c) Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture, under controlled conditions; and d) services related to agro and allied sectors Note: Besides the above, FDI is not allowed in any other agricultural sector/activity	100%	Automatic
1.1	Other conditions:
I. For companies dealing with development of transgenic seeds/vegetables, the following conditions apply: (i) When dealing with genetically modified seeds or planting material the company shall comply with safety requirements in accordance with laws enacted under the Environment (Protection) Act on the genetically modified organisms. (ii) Any import of genetically modified materials if required shall be subject to the conditions laid down vide Notifications issued under Foreign Trade (Development and Regulation) Act, 1992. (iii) The company shall comply with any other Law, Regulation or Policy governing genetically modified material in force from time to time. (iv) Undertaking of business activities involving the use of genetically engineered cells and material shall be subject to the receipt of approvals from Genetic Engineering Approval Committee (GEAC) and Review Committee on Genetic Manipulation (RCGM). (v) Import of materials shall be in accordance with National Seeds Policy.
II. The term ‘under controlled conditions’ covers the following: 􀂙‘Cultivation under controlled conditions’ for the categories of Floriculture, Horticulture, Cultivation of vegetables and Mushrooms is the practice of cultivation wherein rainfall, temperature, solar radiation, air humidity and culture medium are controlled artificially. Control in these parameters may be effected through protected cultivation under green houses, net houses, poly houses or any other improved infrastructure facilities where micro- climatic conditions are regulated anthropogenically.
􀂙In case of Animal Husbandry, scope of the term ‘under controlled Conditions’ covers – o Rearing of animals under intensive farming systems with stall- feeding. Intensive farming system will require climate systems (ventilation, temperature/humidity management), health care and nutrition, herd registering/pedigree recording, use of machinery, waste management systems. o Poultry breeding farms and hatcheries where micro-climate is controlled through advanced technologies like incubators, ventilation systems etc. 􀂙In the case of pisciculture and aquaculture, scope of the term ‘under controlled conditions’ covers – o Aquariums o Hatcheries where eggs are artificially fertilized and fry are hatched and incubated in an enclosed environment with artificial climate control. 􀂙In the case of apiculture, scope of the term ‘‘under controlled conditions’ covers – o Production of honey by bee-keeping, except in forest/wild, in designated spaces with control of temperatures and climatic factors like humidity and artificial feeding during lean seasons.
2	Tea Plantation
2.1	Tea sector including tea plantations Note: Besides the above, FDI is not allowed in any other plantation sector/activity	100%	Government
2.2	Other conditions:
(i) Compulsory divestment of 26% equity of the company in favour of an Indian partner/Indian public within a period of 5 years (ii) Prior approval of the State Government concerned in case of any future land use change.
3	MINING
3.1	Mining and Exploration of metal and non-metal ores including diamond, gold, silver and precious ores but excluding titanium bearing minerals and its ores; subject to the Mines and Minerals (Development & Regulation) Act, 1957.	100%	Automatic
3.2	Coal and Lignite
(1) Coal & Lignite mining for captive consumption by power projects, iron & steel and cement units and other eligible activities permitted under and subject to the provisions of Coal Mines (Nationalization) Act, 1973	100%	Automatic
(2) Setting up coal processing plants like washeries 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.	100%	Automatic
3.3	Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities
3.3.1	Mining and mineral separation of titanium bearing minerals & ores, its value addition and integrated activities subject to sectoral regulations and the Mines and Minerals (Development and Regulation Act 1957)	100%	Government
3.3.2	Other conditions:
India has large reserves of beach sand minerals in the coastal stretches around the country. Titanium bearing minerals viz. Ilmenite, rutile and leucoxene, and Zirconium bearing minerals including zircon are some of the beach sand minerals which have been classified as ‘prescribed substances’under the Atomic Energy Act, 1962. Under the Industrial Policy Statement 1991, mining and production of minerals classified as ‘prescribed substances’ and specified in the Schedule to the Atomic Energy (Control of Production and Use) Order, 1953 were included in the list of industries reserved for the public sector. Vide Resolution No. 8/1(1)/97-PSU/1422 dated 6th October 1998 issued by the Department of Atomic Energy laying down the policy for exploitation of beach sand minerals, private participation including Foreign Direct Investment (FDI), was permitted in mining and production of Titanium ores (Ilmenite, Rutile and Leucoxene) and Zirconium minerals (Zircon). Vide Notification No. S.O.61(E) dated 18.1.2006, the Department of Atomic Energy re-notified the list of ‘prescribed substances’ under the Atomic Energy Act 1962. Titanium bearing ores and concentrates (Ilmenite, Rutile and Leucoxene) and Zirconium, its alloys and compounds and minerals/concentrates including Zircon, were removed from the list of ‘prescribed substances’.
(i) FDI for separation of titanium bearing minerals & ores will be subject to the following additional conditions viz.: (A) value addition facilities are set up within India along with transfer of technology; (B) disposal of tailings during the mineral separation shall be carried out in accordance with regulations framed by the Atomic Energy Regulatory Board such as Atomic Energy (Radiation Protection) Rules, 2004 and the Atomic Energy (Safe Disposal of Radioactive Wastes) Rules, 1987. (ii) FDI will not be allowed in mining of ‘prescribed substances’ listed in the Notification No. S.O. 61(E) dated 18.1.2006 issued by the Department of Atomic Energy. Clarification: (1) For titanium bearing ores such as Ilmenite, Leucoxene and Rutile, manufacture of titanium dioxide pigment and titaniumsponge constitutes value addition. Ilmenite can be processed to produce'Synthetic Rutile or Titanium Slag as an intermediate value added product. (2) The objective is to ensure that the raw material available in the country is utilized for setting up downstream industries and the technology available internationally is also made available for setting up such industries within the country. Thus, if with the technology transfer, the objective of the FDI Policycan be achieved, the conditions prescribed at (i) (A) above shall be deemed to be fulfilled.
4	Petroleum & Natural Gas
4.1	Exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products and natural gas, marketing of natural gas and petroleum products, petroleum product pipelines, natural gas/pipelines, LNG	100%	Automatic
Regasification infrastructure, market study and formulation and Petroleum refining in the private sector, subject to the existing sectoral policy and regulatory framework in the oil marketing sector and the policy of the Government on private participation in exploration of oil and the discovered fields of national oil companies
4.2	Petroleum refining by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs.	49%	Government
MANUFACTURING
5	Manufacture of items reserved for production in Micro and Small Enterprises (MSEs)
5.1	FDI in MSEs (as defined under Micro, Small And Medium Enterprises Development Act, 2006 (MSMED, Act 2006)) will be subject to the sectoral caps, entry routes and other relevant sectoral regulations. Any industrial undertaking which is not a Micro or Small Scale Enterprise, but manufactures items reserved for the MSE sector would require Government route where foreign investment is more than 24% in the capital. Such an undertaking would also require an Industrial License under the Industries (Development & Regulation) Act 1951, for such manufacture. The issue of Industrial License is subject to a few general conditions and the specific condition that the Industrial Undertaking shall undertake to export a minimum of 50% of the new or additional annual production of the MSE reserved items to be achieved within a maximum period of three years. The export obligation would be applicable from the date of commencement of commercial production and in accordance with the provisions of section 11 of the Industries (Development & Regulation) Act 1951
6	DEFENCE
6.1	Defence Industry subject to Industrial license under the Industries (Development & Regulation) Act 1951	26%	Government
6.2	Other conditions:
(i) Licence applications will be considered and licences given by the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, in consultation with Ministry of Defence. (ii) The applicant should be an Indian company / partnership firm. (iii)The management of the applicant company / partnership should be in Indian hands with majority representation on the Board as well as the Chief Executives of the company / partnership firm being resident Indians. (iv) Full particulars of the Directors and the Chief Executives should be furnished along with the applications. (v) The Government reserves the right to verify the antecedents of the foreign collaborators and domestic promoters including their financial standing and credentials in the world market. Preference would be given to original equipment manufacturers or design establishments, and companies having a good track record of past supplies to Armed Forces, Space and Atomic energy sections and having an established R & D base.
(vi) There would be no minimum capitalization for the FDI. A proper assessment, however, needs to be done by the management of the applicant company depending upon the product and the technology. The licensing authority would satisfy itself about the adequacy of the net worth of the non-resident investor taking into account the category of weapons and equipment that are proposed to be manufactured. (vii) There would be a three-year lock-in period for transfer of equity from one non-resident investor to another non-resident investor (including NRIs & erstwhile OCBs with 60% or more NRI stake) and such transfer would be subject to prior approval of the Government. (viii) The Ministry of Defence is not in a position to give purchase guarantee for products to be manufactured. However, the planned acquisition programme for such equipment and overall requirements would be made available to the extent possible. (ix)The capacity norms for production will be provided in the licence based on the application as well as the recommendations of the Ministry of Defence, which will look into existing capacities of similar and allied products. (x) Import of equipment for pre-production activity including development of prototype by the applicant company would be permitted. (xi) Adequate safety and security procedures would need to be put in place by the licensee once the licence is granted and production commences. These would be subject to verification by authorized Government agencies.
(xii) The standards and testing procedures for equipment to be produced under licence from foreign collaborators or from indigenous R & D will have to be provided by the licensee to the Government nominated quality assurance agency under appropriate confidentiality clause. The nominated quality assurance agency would inspect the finished product and would conduct surveillance and audit of the Quality Assurance Procedures of the licensee. Self-certification would be permitted by the Ministry of Defence on case to case basis, which may involve either individual items, or group of items manufactured by the licensee. Such permission would be for a fixed period and subject to renewals. (xiii) Purchase preference and price preference may be given to the Public Sector organizations as per guidelines of the Department of Public Enterprises. (xiv) Arms and ammunition produced by the private manufacturers will be primarily sold to the Ministry of Defence. These items may also be sold to other Government entities under the control of the Ministry of Home Affairs and State Governments with the prior approval of the Ministry of Defence. No such item should be sold within the country to any other person or entity. The export of manufactured items would be subject to policy and guidelines as applicable to Ordnance Factories and Defence Public Sector Undertakings. Non-lethal items would be permitted for sale to persons / entities other than the Central of State Governments with the prior approval of the Ministry of Defence. Licensee would also need to institute a verifiable system of removal of all goods out of their factories. Violation of these provisions may lead to cancellation of the licence.
(xv) Government decision on applications to FIPB for FDI in defence industry sector will be normally communicated within a time frame of 10 weeks from the date of acknowledgement.
SERVICES SECTOR
INFORMATION SERVICES
7	Broadcasting
7.1	Terrestrial Broadcasting FM (FM Radio) subject to such terms and conditions as specified from time to time by Ministry of Information and Broadcasting for grant of permission for setting up of FM Radio Stations	26% (FDI, NRI & PIO investments and portfolio investment)	Government
7.2	Cable Network, subject to Cable Television Network Rules, 1994 and other conditions as specified from time to time by Ministry of Information and Broadcasting	49% (FDI, NRI & PIO investments and portfolio investment)	Government
7.3	Direct–to-Home subject to such guidelines/terms and conditions as specified from time to time by Ministry of Information and Broadcasting	49% (FDI, NRI & PIO investments and portfolio investment) Within this limit, FDI component not to exceed 20%	Government
7.4	Headend-In-The-Sky (HITS) Broadcasting Service refers to the multichannel downlinking and distribution of television programme in C-Band or Ku Band wherein all the pay channels are downlinked at a central facility (Hub/teleport) and again uplinked to a satellite after encryption of channel. At the cable headend these encrypted pay channels are downlinked using a single satellite antenna, transmodulated and sent to the subscribers by using a land based transmission system comprising of infrastructure of cable/optical fibres network.
7.4.1	FDI limit in (HITS) Broadcasting Service is subject to such guidelines/terms and conditions as specified from time to time by Ministry of Information and	74% (total direct and indirect foreign investment including portfolio and FDI)	Automatic up to 49% Government route beyond
Broadcasting.	49% and up to 74%
7.5	Setting up hardware facilities such as up-linking, HUB etc.
(1) Setting up of Up-linking HUB/ Teleports	49% (FDI & FII)	Government
(2) Up-linking a Non-News & Current Affairs TV Channel	100%	Government
(3) Up-linking a News & Current Affairs TV Channel subject to the condition that the portfolio investment from FII/ NRI shall not be ‘persons acting in concert’ with FDI investors, as defined in the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations, 1997	26% (FDI & FII)	Government
7.5.1	Other conditions:
All the activities at (1), (2) and (3) above will be further subject to the condition that the Company permitted to uplink the channel shall certify the continued compliance of this requirement through the Company Secretary at the end of each financial year. FDI for Up-linking TV Channels will be subject to compliance with the Up-linking Policy notified by the Ministry of Information & Broadcasting from time to time.
8	Print Media
8.1	Publishing of Newspaper and periodicals dealing with news and current affairs	26% (FDI and investment by NRIs/PIOs/FII)	Government
8.2	Publication of Indian editions of foreign magazines dealing with news and current affairs	26% (FDI and investment by NRIs/PIOs/FII)	Government
8.2.1	Other Conditions:
(i) ‘[Magazine’, for the purpose of these guidelines, will be defined as a periodical publication, brought out on non-daily basis, containing public news or comments on public news. (ii) Foreign investment would also be subject to the Guidelines for Publication of Indian editions of foreign magazines dealing with news and current affairs issued by the Ministry of Information & Broadcasting on 4.12.2008.
8.3	Publishing/printing of Scientific and Technical Magazines/specialty journals/ periodicals, subject to compliance with the legal framework as applicable and guidelines issued in this regard from time to time by Ministry of Information and Broadcasting.	100%	Government
8.4	Publication of facsimile edition of foreign newspapers	100%	Government
8.4.1	Other Conditions:
FDI should be made by the owner of the original foreign newspapers whose facsimile edition is proposed to be brought out in India. Publication of facsimile edition of foreign newspapers can be undertaken only by an entity incorporated or registered in India under the provisions of the Companies Act, 1956. Publication of facsimile edition of foreign newspaper would also be subject to the Guidelines for publication of newspapers and periodicals dealing with news and current affairs and publication of facsimile edition of foreign newspapers issued by Ministry of Information & Broadcasting on 31.3.2006, as amended from time to time.
9	Civil Aviation
9.1	The Civil Aviation sector includes Airports, Scheduled and Non-Scheduled domestic passenger airlines, Helicopter services / Seaplane services, Ground Handling Services, Maintenance and Repair organizations; Flying training institutes; and Technical training institutions. For the purposes of the Civil Aviation sector: (i) ‘Airport’ means a landing and taking off area for aircrafts, usually with runways and aircraft maintenance
and passenger facilities and includes aerodrome as defined in clause (2) of section 2 of the Aircraft Act, 1934; (ii) "Aerodrome" means any definite or limited ground or water area intended to be used, either wholly or in part, for the landing or departure of aircraft, and includes all buildings, sheds, vessels, piers and other structures thereon or pertaining thereto; (iii)"Air transport service" means a service for the transport by air of persons, mails or any other thing, animate or inanimate, for any kind of remuneration whatsoever, whether such service consists of a single flight or series of flights; (iv)"Air Transport Undertaking" means an undertaking whose business includes the carriage by air of passengers or cargo for hire or reward; (v) "Aircraft component" means any part, the soundness and correct functioning of which, when fitted to an aircraft, is essential to the continued airworthiness or safety of the aircraft and includes any item of equipment; (vi)"Helicopter" means a heavier-than -air aircraft supported in flight by the reactions of the air on one or more power driven rotors on substantially vertical axis; (vii) "Scheduled air transport service" means an air transport service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, each flight being open to use by members of the public; (viii) “‘Non-Scheduled Air Transport service” means any service which is not a scheduled air transport service and will include Cargo airlines; (ix)”Cargo airlines” would mean such airlines which meet the conditions as given in the Civil Aviation Requirements issued by the Ministry of Civil Aviation;
(x) "Seaplane" means an aeroplane capable normally of taking off from and alighting solely on water; (xi)”Ground Handling” means (i) ramp handling , (ii) traffic handling both of which shall include the activities as specified by the Ministry of Civil Aviation through the Aeronautical Information Circulars from time to time, and (iii) any other activity specified by the Central Government to be a part of either ramp handling or traffic handling.
9.2	Airports
(a) Greenfield projects	100%	Automatic
(b) Existing projects	100%	Automatic up to 74% Government route beyond 74%
9.3	Air Transport Services
(a) Air Transport Services would include Domestic Scheduled Passenger Airlines; Non-Scheduled Air Transport Services, helicopter and seaplane services. (b) No foreign airlines would be allowed to participate directly or indirectly in the equity of an Air Transport Undertaking engaged in operating Scheduled and Non-Scheduled Air Transport Services except Cargo airlines. (c) Foreign airlines are allowed to participate in the equity of companies operating Cargo airlines, helicopter and seaplane services.
(1) Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline	49% FDI (100% for NRIs)	Automatic
(2) Non-Scheduled Air Transport Service	74% FDI (100% for NRIs)	Automatic up to 49% Government route beyond 49% and up to 74%
(3) Helicopter services/seaplane services requiring DGCA approval	100%	Automatic
9.4	Other services under Civil Aviation sector
(1) Ground Handling Services subject to sectoral regulations and security clearance	74% FDI (100% for NRIs)	Automatic up to 49% Government route beyond 49% and up to 74%
(2) Maintenance and Repair organizations; flying training institutes; and technical training institutions	100%	Automatic
10	Courier services for carrying packages, parcels and other items which do not come within the ambit of the Indian Post Office Act, 1898 and excluding the activity relating to the distribution of letters.	100%	Government
11	Construction Development: Townships, Housing, Built-up infrastructure
11.1	Townships, housing, built-up infrastructure and construction- development projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure)	100%	Automatic
11.2	Investment will be subject to the following conditions: (1) Minimum area to be developed under each project would be as under: (i) In case of development of serviced housing plots, a minimum land area of 10 hectares (ii) In case of construction-development projects, a minimum built-up area of 50,000 sq.mts
(iii)In case of a combination project, any one of the above two conditions would suffice (2) Minimum capitalization of US$10 million for wholly owned subsidiaries and US$ 5 million for joint ventures with Indian partners. The funds would have to be brought in within six months of commencement of business of the Company. (3) Original investment cannot be repatriated before a period of three years from completion of minimum capitalization. Original investment means the entire amount brought in as FDI. The lock-in period of three years will be applied from the date of receipt of each installment/tranche of FDI or from the date of completion of minimum capitalization, whichever is later. However, the investor may be permitted to exit earlier with prior approval of the Government through the FIPB. (4) At least 50% of each such project must be developed within a period of five years from the date of obtaining all statutory clearances. The investor/investee company would not be permitted to sell undeveloped plots. For the purpose of these guidelines, ‘undeveloped plots’ will mean where roads, water supply, street lighting, drainage, sewerage, and other conveniences, as applicable under prescribed regulations, have not been made available. It will be necessary that the investor provides this infrastructure and obtains the completion certificate from the concerned local body/service agency before he would be allowed to dispose of serviced housing plots. (5) The project shall conform to the norms and standards, including land use requirements and provision of community amenities and common facilities, as laid down in the applicable building control regulations, bye-laws, rules, and other regulations of the State Government/Municipal/Local Body concerned. (6) The investor/investee company shall be responsible for obtaining all necessary approvals, including those of the building/layout plans, developing
internal and peripheral areas and other infrastructure facilities, payment of development, external development and other charges and complying with all other requirements as prescribed under applicable rules/bye-laws/regulations of the State Government/ Municipal/Local Body concerned. (7) The State Government/ Municipal/ Local Body concerned, which approves the building / development plans, would monitor compliance of the above conditions by the developer. Note: (i) The conditions at (1) to (4) above would not apply to Hotels & Tourism, Hospitals, Special Economic Zones (SEZs), Education Sector, Old age Homes and investment by NRIs. (ii) FDI is not allowed in Real Estate Business.
12	Industrial Parks – new and existing	100%	Automatic
12.1	(i) “Industrial Park” is a project in which quality infrastructure in the form of plots of developed land or built up space or a combination with common facilities, is developed and made available to all the allottee units for the purposes of industrial activity. (ii) “Infrastructure” refers to facilities required for functioning of units located in the Industrial Park and includes roads (including approach roads), water supply and sewerage, common effluent treatment facility, telecom network, generation and distribution of power, air conditioning. (iii) “ Common Facilities” refer to the facilities available for all the units located in the industrial park, and include facilities of power, roads (including approach roads), water supply and sewerage, common effluent treatment, common testing, telecom services, air conditioning, common facility buildings, industrial canteens, convention/conference halls, parking, travel desks, security service, first aid center, ambulance and other safety services, training facilities and such other facilities meant for common use of the units located in the Industrial
Park. (iv) “Allocable area” in the Industrial Park means- (a) in the case of plots of developed land- the net site area available for allocation to the units, excluding the area for common facilities. (b) in the case of built up space- the floor area and built up space utilized for providing common facilities. (c) in the case of a combination of developed land and built-up space- the net site and floor area available for allocation to the units excluding the site area and built up space utilized for providing common facilities. (v) “Industrial Activity” means manufacturing; electricity; gas and water supply; post and telecommunications; software publishing, consultancy and supply; data processing, database activities and distribution of electronic content; other computer related activities; basic and applied R&D on bio-technology, pharmaceutical sciences/life sciences, natural sciences and engineering; business and management consultancy activities; and architectural, engineering and other technical activities.
12.2	FDI in Industrial Parks would not be subject to the conditionalities applicable for construction development projects etc. spelt out in para 11 above, provided the Industrial Parks meet with the under-mentioned conditions: (i) it would comprise of a minimum of 10 units and no single unit shall occupy more than 50% of the allocable area;
(ii) the minimum percentage of the area to be allocated for industrial activity shall not be less than 66% of the total allocable area.
13	Satellites – Establishment and operation
13.1	Satellites – Establishment and operation, subject to the sectoral guidelines of Department of Space/ISRO	74%	Government
14	Private Security Agencies	49 %	Government
15	Telecom Services Investment caps and other conditions for specified services are given below. However, licensing and security requirements notified by the Department of Telecommunications will need to be complied with for all services.
15.1	(i) Telecom services	74%	Automatic up to 49% Government route beyond 49% and up to 74%
15.1.1	Other conditions:
(1) General Conditions: (i) This is applicable in case of Basic, Cellular, Unified Access Services, National/ International Long Distance, V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS) and other value added Services. (ii) Both direct and indirect foreign investment in the licensee company shall be counted for the purpose of FDI ceiling. Foreign Investment shall include investment by Foreign Institutional Investors (FIIs), Non-resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible preference shares held by foreign entity.
In any case, the `Indian’ shareholding will not be less than 26 Percent. (iii) FDI in the licensee company/Indian promoters/investment companies including their holding companies shall require approval of the Foreign Investment Promotion Board (FIPB) if it has a bearing on the overall ceiling of 74 percent. While approving the investment proposals, FIPB shall take note that investment is not coming from countries of concern and/or unfriendly entities. (iv) The investment approval by FIPB shall envisage the conditionality that Company would adhere to licence Agreement. (v) FDI shall be subject to laws of India and not the laws of the foreign country/countries. (2) Security Conditions: (i) The Chief Officer In-charge of technical network operations and the Chief Security Officer should be a resident Indian citizen. (ii) Details of infrastructure/network diagram (technical details of the network) could be provided on a need basis only to telecom equipment suppliers/manufacturers and the affiliate/parents of the licensee company. Clearance from the licensor (Department of Telecommunications) would be required if such information is to be provided to anybody else. (iii)For security reasons, domestic traffic of such entities as may be identified /specified by the licensor shall not be hauled/routed to any place outside India. (iv)The licensee company shall take adequate and timely measures to ensure that the information transacted through a network by the subscribers is secure and protected.
(v) The officers/officials of the licensee companies dealing with the lawful interception of messages will be resident Indian citizens. (vi)The majority Directors on the Board of the company shall be Indian citizens. (vii) The positions of the Chairman, Managing Director, Chief Executive Officer (CEO) and/or Chief Financial Officer (CFO), if held by foreign nationals, would require to be security vetted by Ministry of Home Affairs (MHA). Security vetting shall be required periodically on yearly basis. In case something adverse is found during the security vetting, the direction of MHA shall be binding on the licensee. (viii) The Company shall not transfer the following to any person/place outside India:- (a) Any accounting information relating to subscriber (except for international roaming/billing) (Note: it does not restrict a statutorily required disclosure of financial nature) ; and (b) User information (except pertaining to foreign subscribers using Indian Operator‘s network while roaming). (ix)The Company must provide traceable identity of their subscribers. However, in case of providing service to roaming subscriber of foreign Companies, the Indian Company shall endeavour to obtain traceable identity of roaming subscribers from the foreign company as a part of its roaming agreement. (x) On request of the licensor or any other agency authorised by the licensor, the telecom service provider should be able to provide the geographical location of any subscriber (BTS location) at a given point of time.
(xi)The Remote Access (RA) to Network would be provided only to approved location(s) abroad through approved location(s) in India. The approval for location(s) would be given by the Licensor (DOT) in consultation with the Ministry of Home Affairs. (xii) Under no circumstances, should any RA to the suppliers/manufacturers and affiliate(s) be enabled to access Lawful Interception System(LIS), Lawful Interception Monitoring(LIM), Call contents of the traffic and any such sensitive sector/data, which the licensor may notify from time to time. (xiii) The licensee company is not allowed to use remote access facility for monitoring of content. (xiv) Suitable technical device should be made available at Indian end to the designated security agency /licensor in which a mirror image of the remote access information is available on line for monitoring purposes. (xv) Complete audit trail of the remote access activities pertaining to the network operated in India should be maintained for a period of six months and provided on request to the licensor or any other agency authorised by the licensor. (xvi) The telecom service providers should ensure that necessary provision (hardware/software) is available in their equipment for doing the Lawful interception and monitoring from a centralized location. (xvii)The telecom service providers should familiarize/train Vigilance Technical Monitoring (VTM)/security agency officers/officials in respect of relevant operations/features of their systems. (xviii) It shall be open to the licensor to restrict the Licensee Company

from operating in any sensitive area from the National Security angle. (xix) In order to maintain the privacy of voice and data, monitoring shall only be upon authorisation by the Union Home Secretary or Home Secretaries of the States/Union Territories. (xx) For monitoring traffic, the licensee company shall provide access of their network and other facilities as well as to books of accounts to the security agencies. (xxi) The aforesaid Security Conditions shall be applicable to all the licensee companies operating telecom services covered under this circular irrespective of the level of FDI. (xxii)Other Service Providers (OSPs), providing services like Call Centres, Business Process Outsourcing (BPO), tele-marketing, tele- education, etc, and are registered with DoT as OSP. Such OSPs operate the service using the telecom infrastructure provided by licensed telecom service providers and 100% FDI is permitted for OSPs. As the security conditions are applicable to all licensed telecom service providers, the security conditions mentioned above shall not be separately enforced on OSPs. (3) The above General Conditions and Security Conditions shall also be applicable to the companies operating telecom service(s) with the FDI cap of 49%. (4) All the telecom service providers shall submit a compliance report on the aforesaid conditions to the licensor on 1st day of July and January on six monthly basis.
15.2	(a) ISP with gateways (b) ISP‘s not providing gateways i.e. without gate-ways (both for satellite and marine cables)	74%	Automatic up to 49% Government route beyond 49% and up to 74%
Note: The new guidelines of August 24, 2007 Department of Telecommunications provide for new ISP licenses with FDI up to 74%. (c) Radio paging (d) End-to-End bandwidth
15.3	(a) Infrastructure provider providing dark fibre, right of way, duct space, tower (IP Category I) (b)Electronic Mail (c) Voice Mail Note: Investment in all the above activities is subject to the conditions that such companies will divest 26% of their equity in favour of Indian public in 5 years, if these companies are listed in other parts of the world.	100%	Automatic up to 49% Government route beyond 49%
16	TRADING
16.1	(i) Cash & Carry Wholesale Trading/ Wholesale Trading (including sourcing from MSEs)	100%	Automatic
16.1.1	Definition: Cash & Carry Wholesale trading/Wholesale trading, would mean sale of goods/merchandise to retailers, industrial, commercial, institutional or other professional business users or to other wholesalers and related subordinated service providers. Wholesale trading would, accordingly, be sales for the purpose of trade, business and profession, as opposed to sales for the purpose of personal consumption. The yardstick to determine whether the sale is wholesale or not would be the type of customers to whom the sale is made and not the size and volume of sales. Wholesale trading would include resale, processing and thereafter sale, bulk imports with ex-port/ex-bonded warehouse business sales and B2B e-Commerce.
16.1.2	Guidelines for Cash & Carry Wholesale Trading/Wholesale Trading (WT): (a) For undertaking WT, requisite licenses/registration/ permits, as specified under the relevant Acts/Regulations/Rules/Orders of the State Government/Government Body/Government Authority/Local Self-Government Body under that State Government should be obtained. (b) Except in case of sales to Government, sales made by the wholesaler would be considered as ‘cash & carry wholesale trading/wholesale trading’ with valid business customers, only when WT are made to the following entities: (I) Entities holding sales tax/ VAT registration/service tax/excise duty registration; or (II) Entities holding trade licenses i.e. a license/registration certificate/membership certificate/registration under Shops and Establishment Act, issued by a Government Authority/ Government Body/ Local Self-Government Authority, reflecting that the entity/person holding the license/ registration certificate/ membership certificate, as the case may be, is itself/ himself/herself engaged in a business involving commercial activity; or (III) Entities holding permits/license etc. for undertaking retail trade (like tehbazari and similar license for hawkers) from Government Authorities/Local Self Government Bodies; or (IV) Institutions having certificate of incorporation or registration as a society or registration as public trust for their self consumption. Note: An Entity, to whom WT is made, may fulfill any one of
the 4 conditions. ( c) Full records indicating all the details of such sales like name of entity, kind of entity, registration/license/ permit etc. number, amount of sale etc. should be maintained on a day to day basis. (d) WT of goods would be permitted among companies of the same group. However, such WT to group companies taken together should not exceed 25% of the total turnover of the wholesale venture (e) WT can be undertaken as per normal business practice, including extending credit facilities subject to applicable regulations. (f) A Wholesale/Cash & carry trader cannot open retail shops to sell to the consumer directly.
16.2	E-commerce activities	100%	Automatic
E-commerce activities refer to the activity of buying and selling by a company through the e-commerce platform. Such companies would engage only in Business to Business (B2B) e-commerce and not in retail trading, inter-alia implying that existing restrictions on FDI in domestic trading would be applicable to e-commerce as well.
16.3	Test marketing of such items for which a company has approval for manufacture, provided such test marketing facility will be for a period of two years, and investment in setting up manufacturing facility commences simultaneously with test marketing.	100%	Government
16.4	Single Brand product retail trading	100%	Government
(1) Foreign Investment in Single Brand product retail trading is aimed at
attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices. (2) FDI in Single Brand product retail trading would be subject to the following conditions: (a) Products to be sold should be of a ‘Single Brand’ only. (b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India. (c) ‘Single Brand’ product-retail trading would cover only products which are branded during manufacturing. (d) The foreign investor should be the owner of the brand. (e) In respect of proposals involving FDI beyond 51%, mandatory sourcing of at least 30% of the value of products sold would have to be done from Indian ‘small industries/ village and cottage industries, artisans and craftsmen’. 'Small industries' would be defined as industries which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a 'small industry' for this purpose. The compliance of this condition will be ensured through self-certification by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts, which the company will be required to maintain. (3) Application seeking permission of the Government for FDI in retail trade of ‘Single Brand’ products would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The application would specifically indicate the product/ product categories which
are proposed to be sold under a ‘Single Brand’. Any addition to the product/ product categories to be sold under ‘Single Brand’ would require a fresh approval of the Government. (4) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the products proposed to be sold satisfy the notified guidelines, before being considered by the FIPB for Government approval.
FINANCIAL SERVICES Foreign investment in other financial services , other than those indicated below, would require prior approval of the Government:
17	Asset Reconstruction Companies
17.1	‘Asset Reconstruction Company’ (ARC) means a company registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).	49% of paid-up capital of ARC	Government
17.2	Other conditions:
(i) Persons resident outside India, other than Foreign Institutional Investors (FIIs), can invest in the capital of Asset Reconstruction Companies (ARCs) registered with Reserve Bank only under the Government Route. Such investments have to be strictly in the nature of FDI. Investments by FIIs are not permitted in the equity capital of ARCs. (ii) However, FIIs registered with SEBI can invest in the Security Receipts (SRs) issued by ARCs registered with Reserve Bank. FIIs can invest up to 49 per cent of each tranche of scheme of SRs, subject to the condition that investment by a single FII in each tranche of SRs shall not exceed 10 per cent of the issue.
(iii)Any individual investment of more than 10% would be subject to provisions of section 3(3) (f) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
18	Banking –Private sector
18.1	Banking –Private sector	74% including investment by FIIs	Automatic up to 49% Government route beyond 49% and up to 74%
18.2	Other conditions:
(1) This 74% limit will include investment under the Portfolio Investment Scheme (PIS) by FIIs, NRIs and shares acquired prior to September 16, 2003 by erstwhile OCBs, and continue to include IPOs, Private placements, GDR/ADRs and acquisition of shares from existing shareholders. (2) The aggregate foreign investment in a private bank from all sources will be allowed up to a maximum of 74 per cent of the paid up capital of the Bank. At all times, at least 26 per cent of the paid up capital will have to be held by residents, except in regard to a wholly-owned subsidiary of a foreign bank. (3) The stipulations as above will be applicable to all investments in existing private sector banks also. (4) The permissible limits under portfolio investment schemes through stock exchanges for FIIs and NRIs will be as follows: (i) In the case of FIIs, as hitherto, individual FII holding is restricted to 10 per cent of the total paid-up capital, aggregate limit for all FIIs cannot exceed 24 per cent of the total paid-up capital, which can be raised to 49 per cent of the total paid-up capital by the bank concerned through a resolution by its Board of Directors followed by a special resolution to that effect by its General Body.
(a) Thus, the FII investment limit will continue to be within 49 per cent of the total paid-up capital. (b) In the case of NRIs, as hitherto, individual holding is restricted to 5 per cent of the total paid-up capital both on repatriation and non- repatriation basis and aggregate limit cannot exceed 10 per cent of the total paid-up capital both on repatriation and non-repatriation basis. However, NRI holding can be allowed up to 24 per cent of the total paid-up capital both on repatriation and non-repatriation basis provided the banking company passes a special resolution to that effect in the General Body. (c) Applications for foreign direct investment in private banks having joint venture/subsidiary in insurance sector may be addressed to the Reserve Bank of India (RBI) for consideration in consultation with the Insurance Regulatory and Development Authority (IRDA) in order to ensure that the 26 per cent limit of foreign shareholding applicable for the insurance sector is not being breached. (d) Transfer of shares under FDI from residents to non-residents will continue to require approval of RBI and Government as per para 3.6.2 above as applicable. (e) The policies and procedures prescribed from time to time by RBI and other institutions such as SEBI, D/o Company Affairs and IRDA on these matters will continue to apply. (f) RBI guidelines relating to acquisition by purchase or otherwise of shares of a private bank, if such acquisition results in any person owning or controlling 5 per cent or more of the paid up capital of the private bank will apply to non-resident investors as well. (ii) Setting up of a subsidiary by foreign banks (a) Foreign banks will be permitted to either have branches or
subsidiaries but not both. (b) Foreign banks regulated by banking supervisory authority in the home country and meeting Reserve Bank‘s licensing criteria will be allowed to hold 100 per cent paid up capital to enable them to set up a wholly-owned subsidiary in India. (c) A foreign bank may operate in India through only one of the three channels viz., (i) branches (ii) a wholly-owned subsidiary and (iii) a subsidiary with aggregate foreign investment up to a maximum of 74 per cent in a private bank. (d) A foreign bank will be permitted to establish a wholly-owned subsidiary either through conversion of existing branches into a subsidiary or through a fresh banking license. A foreign bank will be permitted to establish a subsidiary through acquisition of shares of an existing private sector bank provided at least 26 per cent of the paid capital of the private sector bank is held by residents at all times consistent with para (i) (b) above. (e) A subsidiary of a foreign bank will be subject to the licensing requirements and conditions broadly consistent with those for new private sector banks. (f) Guidelines for setting up a wholly-owned subsidiary of a foreign bank will be issued separately by RBI (g) All applications by a foreign bank for setting up a subsidiary or for conversion of their existing branches to subsidiary in India will have to be made to the RBI. (iii) At present there is a limit of ten per cent on voting rights in respect of banking companies, and this should be noted by potential investor. Any change in the ceiling can be brought about only after final policy decisions and appropriate Parliamentary approvals.
19	Banking- Public Sector
19.1	Banking- Public Sector subject to	20% (FDI and	Government
Banking Companies (Acquisition & Transfer of Undertakings) Acts 1970/80. This ceiling (20%) is also applicable to the State Bank of India and its associate Banks.	Portfolio Investment)
20	Commodity Exchanges
20.1	1 Futures trading in commodities are regulated under the Forward Contracts (Regulation) Act, 1952. Commodity Exchanges, like Stock Exchanges, are infrastructure companies in the commodity futures market. With a view to infuse globally acceptable best practices, modern management skills and latest technology, it was decided to allow foreign investment in Commodity Exchanges. 2 For the purposes of this chapter, (i) “”Commodity Exchange” is a recognized association under the provisions of the Forward Contracts (Regulation) Act, 1952, as amended from time to time, to provide exchange platform for trading in forward contracts in commodities. (ii) “recognized association” means an association to which recognition for the time being has been granted by the Central Government under Section 6 of the Forward Contracts (Regulation) Act, 1952 (iii) “Association” means any body of individuals, whether incorporated or not, constituted for the purposes of regulating and controlling the business of the sale or purchase of any goods and commodity derivative. (iv)””Forward contract” means a contract for the delivery of goods and which is not a ready delivery contract. (v) “Commodity derivative” means- • a contract for delivery of goods, which is not a ready delivery contract; or
a contract for differences which derives its value from prices or indices of prices of such underlying goods or activities, services, rights, interests and events, as may be notified in consultation with the Forward Markets Commission by the Central Government, but does not include securities.
20.2	Policy for FDI in Commodity Exchange	49% (FDI & FII) [Investment by Registered FII under Portfolio Investment Scheme (PIS) will be limited to 23% and Investment under FDI Scheme limited to 26% ]	Government (For FDI)
20.3	Other conditions:
(i) FII purchases shall be restricted to secondary market only and (ii) No non-resident investor/ entity, including persons acting in concert, will hold more than 5% of the equity in these companies.
21	Credit Information Companies (CIC)
21.1	Credit Information Companies	49% (FDI & FII)	Government
21.2	Other Conditions:
(1) Foreign investment in Credit Information Companies is subject to the Credit Information Companies (Regulation) Act, 2005. (2) Foreign investment is permitted under the Government route, subject to regulatory clearance from RBI. (3) Investment by a registered FII under the Portfolio Investment Scheme would be permitted up to 24% only in the CICs listed at the Stock Exchanges, within the overall limit of 49% for foreign investment. (4) Such FII investment would be permitted subject to the conditions that: (a) No single entity should directly or indirectly hold more than 10% equity.
(b) Any acquisition in excess of 1% will have to be reported to RBI as a mandatory requirement; and (c) FIIs investing in CICs shall not seek a representation on the Board of Directors based upon their shareholding.
22	Infrastructure Company in the Securities Market
22.1	Infrastructure companies in Securities Markets, namely, stock exchanges, depositories and clearing corporations, in compliance with SEBI Regulations	49% (FDI & FII) [FDI limit of 26 per cent and an FII limit of 23 per cent of the paid-up capital ]	Government (For FDI)
22.2	Other Conditions:
22.2.1	FII can invest only through purchases in the secondary market
23	Insurance
23.1	Insurance	26%	Automatic
23.2	Other Conditions:
(1) FDI in the Insurance sector, as prescribed in the Insurance Act, 1938, is allowed under the automatic route. (2) This will be subject to the condition that Companies bringing in FDI shall obtain necessary license from the Insurance Regulatory & Development Authority for undertaking insurance activities.
24	Non-Banking Finance Companies (NBFC)
24.1	Foreign investment in NBFC is allowed under the automatic route in only the following activities: (i) Merchant Banking (ii) Under Writing (iii) Portfolio Management Services (iv)Investment Advisory Services (v) Financial Consultancy	100%	Automatic
(vi)Stock Broking (vii) Asset Management (viii) Venture Capital (ix) Custodian Services (x) Factoring (xi) Credit Rating Agencies (xii) Leasing & Finance (xiii) Housing Finance (xiv) Forex Broking (xv) Credit Card Business (xvi) Money Changing Business (xvii) Micro Credit (xviii) Rural Credit
24.2	Other Conditions:
(1) Investment would be subject to the following minimum capitalisation norms: (i) US $0.5 million for foreign capital up to 51% to be brought upfront (ii) US $ 5 million for foreign capital more than 51% and up to 75% to be brought upfront (iii)US $ 50 million for foreign capital more than 75% out of which US$ 7.5 million to be brought upfront and the balance in 24 months. (iv)100% foreign owned NBFCs with a minimum capitalisation of US$ 50 million can set up step down subsidiaries for specific NBFC activities, without any restriction on the number of operating subsidiaries and without bringing in additional capital. The minimum capitalization condition as mandated by para 3.10.4.1, therefore, shall not apply to downstream subsidiaries.
(v) Joint Venture operating NBFCs that have 75% or less than 75% foreign investment can also set up subsidiaries for undertaking other NBFC activities, subject to the subsidiaries also complying with the applicable minimum capitalisation norm mentioned in (i), (ii) and (iii) above and (vi) below. (vi)Non- Fund based activities : US $0.5 million to be brought upfront for all permitted non-fund based NBFCs irrespective of the level of foreign investment subject to the following condition: It would not be permissible for such a company to set up any subsidiary for any other activity, nor it can participate in any equity of an NBFC holding/operating company. Note: The following activities would be classified as Non-Fund Based activities: (a) Investment Advisory Services (b) Financial Consultancy (c) Forex Broking (d) Money Changing Business (e) Credit Rating Agencies (vii) This will be subject to compliance with the guidelines of RBI. Note: (i) Credit Card business includes issuance, sales, marketing & design of various payment products such as credit cards, charge cards, debit cards, stored value cards, smart card, value added cards etc. (ii) Leasing & Finance covers only financial leases and not operating leases.
(2) The NBFC will have to comply with the guidelines of the relevant regulator/ s, as applicable
25	Pharmaceuticals
25.1	Greenfield	100%	Automatic
25.2	Existing Companies	100%	Government

( as per serial number 4 )

FORM A2 (For payments other than imports and remittances covering intermediary trade) Application for Remittance Abroad AD Code No.________________________ Form No.___________________________ (To be filled in by the Authorised Dealer) Serial No. __________________________ (For use of Reserve Bank of India) Currency _______________ Amount _____________ Equivalent to Rs. _____________________________ (To be completed by Authorised Dealer) I/We __________________________________________________________________________ (Name of applicant remitter) authorize _______________________________________________________________________ (Name of AD branch) Savings Bank/ Current/ RFC/ EEFC A/c. No. _______________________ together with their charges and * a) Issue a draft : Beneficiary's Name____________________________________ Address __________________________________ __________________________________ * b) Effect the foreign exchange remittance directly – 1) Beneficiary's Name __________________________________ 2) Name and address of the bank __________________________________ 3) Account No. __________________________________ * c) Issue travelers cheques for __________________________________ * d) Issue foreign currency notes for __________________________________ * (Strike out whichever is not applicable) for the purpose indicated below (Remitter should put a tick (√ ) against an appropriate purpose code. In case of doubt/ difficulty, the AD bank should be consulted ). __________________________ Signature Name : ________________________________________ Date : S.No Purpose Group Name Purpose code Description As per the Annex I Declaration (Under FEMA 1999) I, __________________________________________________ declare that – * (1) The total amount of foreign exchange purchased from or remitted through, all sources in India during this calendar year including this application is within USD _________________ (USD _________________ ______________________________________________________________________________ only) the annual limit prescribed by Reserve Bank of India for the said purpose. * (2) Foreign exchange purchased from you is for the purpose indicated above. * (Strike out whichever is not applicable ) Signature Name ______________________ Date :	AD Code No.________________________ Form No.___________________________ (To be filled in by the Authorised Dealer) Serial No. __________________________ (For use of Reserve Bank of India) Currency _______________ Amount _____________ Equivalent to Rs. _____________________________ (To be completed by Authorised Deale
Annex I-Purpose codes for reporting under FETERS Payment purposes( For use in BOP file) Gr. No Purpose Group Name Purpose code Description 0 Capital Account S 0017 Acquisition of non-produced non-financial assets (Purchase of intangible assets like patents, copyrights, trademarks etc., land acquired by government, use of natural resources) – Government S 0019 Acquisition of non-produced non-financial assets (Purchase of intangible assets like patents, copyrights, trademarks etc., use of natural resources) – Non-Government S 0026 Capital transfers ( Guarantees payments, Investment Grant given by the government/international organisation, exceptionally large Non-life insurance claims) – Government S 0027 Capital transfers ( Guarantees payments, Investment Grant given by the Non-government, exceptionally large Non-life insurance claims) – Non-Government S 0099 Other capital payments not included elsewhere Financial Accounts Foreign Direct Investments S 0003 Indian Direct investment abroad (in branches & wholly owned subsidiaries) in equity Shares S 0004 Indian Direct investment abroad (in subsidiaries and associates) in debt instruments S 0005 Indian investment abroad – in real estate S 0006 Repatriation of Foreign Direct Investment made by overseas Investors in India – in equity shares S 0007 Repatriation of Foreign Direct Investment in made by overseas Investors India – in debt instruments S 0008 Repatriation of Foreign Direct Investment made by overseas Investors in India – in real estate Foreign portfolio investments S 0001 Indian Portfolio investment abroad – in equity shares S 0002 Indian Portfolio investment abroad – in debt instruments S 0009 Repatriation of Foreign Portfolio Investment made by overseas Investors in India – in equity shares S 0010 Repatriation of Foreign Portfolio Investment made by overseas Investors in India – in debt instruments External Commercial Borrowings S 0011 Loans extended to Non-Residents S 0012 Repayment of long & medium term loans with original maturity above one year received from Non-Residents Short term loans S 0013 Repayment of short term loans with original maturity up to one year received from Non-Residents Banking capital S 0014 Repatriation of Non-Resident Deposits (FCNR(B)/NR(E)RA etc) S 0015 Repayment of loans & overdrafts taken by ADs on their own account. S 0016 Sale of a foreign currency against another foreign currency Financial derivatives and others S 0020 Payments made on account of margin payments, premium payment and settlement amount etc. under Financial derivative transactions. S 0021 Payments made on account of sale of share under Employee stock option S 0022 Investment in Indian Depositories Receipts (IDRs) S 0023 Remittances made under Liberalised Remittance Scheme (LRS) for Individuals External Assistance S 0024 External Assistance extended by India. e.g. Loans and advances extended by India to Foreign governments under various agreements S 0025 Repayments made on account of External Assistance received by India. 1 Transport S 0201 Payments for surplus freight/passenger fare by foreign shipping companies operating in India S 0202 Payment for operating expenses of Indian shipping companies operating abroad S 0203 Freight on imports – Shipping companies S 0204 Freight on exports – Shipping companies S 0205 Operational leasing/Rental of Vessels (with crew) –Shipping companies S 0206 Booking of passages abroad – Shipping companies S 0207 Payments for surplus freight/passenger fare by foreign Airlines companies operating in India S 0208 Operating expenses of Indian Airlines companies operating abroad S 0209 Freight on imports – Airlines companies S 0210 Freight on exports – Airlines companies S 0211 Operational leasing / Rental of Vessels (with crew) – Airline companies S 0212 Booking of passages abroad – Airlines companies S 0214 Payments on account of stevedoring, demurrage, port handling charges etc.(Shipping companies) S 0215 Payments on account of stevedoring, demurrage, port handling charges, etc.(Airlines companies) S 0216 Payments for Passenger - Shipping companies S 0217 Other payments by Shipping companies S 0218 Payments for Passenger - Airlines companies S 0219 Other Payments by Airlines companies S 0220 Payments on account of freight under other modes of transport (Internal Waterways, Roadways, Railways, Pipeline transports and others) S 0221 Payments on account of passenger fare under other modes of transport (Internal Waterways, Roadways, Railways, Pipeline transports and others) S 0222 Postal & Courier services by Air S 0223 Postal & Courier services by Sea S 0224 Postal & Courier services by others 2 Travel S 0301 Business travel S 0303 Travel for pilgrimage S 0304 Travel for medical treatment S 0305 Travel for education (including fees, hostel expenses etc.) S 0306 Other travel (including holiday trips and payments for settling international credit cards transactions) 3 Construction services S 0501 Construction of projects abroad by Indian companies including import of goods at project site abroad S 0502 Cost of construction etc. of projects executed by foreign companies in India. 4 Insurance and pension services S 0601 Life Insurance premium except term insurance S 0602 Freight insurance – relating to import & export of goods S 0603 Other general insurance premium including reinsurance premium; and term life insurance premium S 0605 Auxiliary services including commission on insurance S 0607 Insurance claim Settlement of non-life insurance; and life insurance (only term insurance) S 0608 Life Insurance Claim Settlements S 0609 Standardised guarantee services S 0610 Premium for pension funds S 0611 Periodic pension entitlements e.g. monthly quarterly or yearly payments of pension amounts by Indian Pension Fund Companies. S 0612 Invoking of standardised guarantees 5 Financial services S 0701 Financial intermediation, except investment banking - Bank charges, collection charges, LC charges etc. S 0702 Investment banking – brokerage, under writing commission etc. S 0703 Auxiliary services – charges on operation & regulatory fees, custodial services, depository services etc. 6 Telecommunication, Computer & Information Services S 0801 Hardware consultancy implementation S 0802 Software consultancy implementation S 0803 Data base, data processing charges S 0804 Repair and maintenance of computer and software S 0805 News agency services S 0806 Other information services- Subscription to newspapers, periodicals S 0807 Off-site software imports S 0808 Telecommunication services including electronic mail services and voice mail services S 0809 Satellite services including space shuttle and rockets etc 7 Charges for the use of intellectual property n.i.e S 0901 Franchises services S 0902 Payment for use, through licensing arrangements, of produced originals or prototypes (such as manuscripts and films), patents, copyrights, trademarks and industrial processes etc. 8 Other Business Services S 1002 Trade related services – commission on exports / imports S 1003 Operational leasing services (other than financial leasing) without operating crew, including charter hire- Airlines companies S 1004 Legal services S 1005 Accounting, auditing, book-keeping services S 1006 Business and management consultancy and public relations services S 1007 Advertising, trade fair service S 1008 Research & Development services S 1009 Architectural services S 1010 Agricultural services like protection against insects & disease, increasing of harvest yields, forestry services. S 1011 Payments for maintenance of offices abroad S 1013 Environmental Services S 1014 Engineering Services S 1015 Tax Consulting Services S 1016 Market research and public opinion polling service S 1017 Publishing and printing services S 1018 Mining services like on–site processing services analysis of ores etc. S 1020 Commission agent services S 1021 Wholesale and retailing trade services. S 1022 Operational leasing services (other than financial leasing) without operating crew, including charter hire- Shipping companies S 1023 Other Technical Services including scientific/space services. S 1099 Other services not included elsewhere 9 Personal, Cultural & Recreational services S 1101 Audio-visual and related services like Motion picture and video tape production, distribution and projection services. S 1103 Radio and television production, distribution and transmission services S 1104 Entertainment services S 1105 Museums, library and archival services S 1106 Recreation and sporting activities services S 1107 Education (e.g. fees for correspondence courses abroad ) S 1108 Health Service (payment towards services received from hospitals, doctors, nurses, paramedical and similar services etc. rendered remotely or on-site) S 1109 Other Personal, Cultural & Recreational services 10 Govt. not included elsewhere (G.n.i.e.) S 1201 Maintenance of Indian embassies abroad S 1202 Remittances by foreign embassies in India 11 Secondary Income S 1301 Remittance for family maintenance and savings S 1302 Remittance towards personal gifts and donations S 1303 Remittance towards donations to religious and charitable institutions abroad S 1304 Remittance towards grants and donations to other governments and charitable institutions established by the governments S 1305 Contributions/donations by the Government to international institutions S 1306 Remittance towards payment / refund of taxes S 1307 Outflows on account of migrant transfers including personal effects 12 Primary Income S 1401 Compensation of employees S 1402 Remittance towards interest on Non-Resident deposits (FCNR(B)/NR(E)RA, etc.) S 1403 Remittance towards interest on loans from Non-Residents (ST/MT/LT loans) e.g. External Commercial Borrowings, Trade Credits, etc. S 1405 Remittance towards interest payment by ADs on their own account (to VOSTRO a/c holders or the OD on NOSTRO a/c.) S 1408 Remittance of profit by FDI enterprises in India (by branches of foreign companies including bank branches) S 1409 Remittance of dividends by FDI enterprises in India (other than branches) on equity and investment fund shares S 1410 Payment of interest by FDI enterprises in India to their Parent company abroad. S 1411 Remittance of interest income on account of Portfolio Investment in India S 1412 Remittance of dividends on account of Portfolio Investment in India on equity and investment fund shares 13 Others S 1501 Refunds / rebates / reduction in invoice value on account of exports S 1502 Reversal of wrong entries, refunds of amount remitted for non-exports S 1503 Payments by residents for international bidding S 1504 Notional sales when export bills negotiated/ purchased/ discounted are dishonored/ crystallised/ cancelled and reversed from suspense account S 1505 Deemed Imports (exports between SEZ, EPZs and Domestic tariff areas) 14 Maintenance and repair services n.i.e S 1601 Payments on account of maintenance and repair services rendered for Vessels, ships, boats, warships, etc. S 1602 Payments on account of maintenance and repair services rendered for aircrafts, space shuttles, rockets, military aircrafts, helicopters, etc. 15 Manufacturing services (goods for processing) S 1701 Payments for processing of goods