1. HABIBULLAH & CO. CHARTERED ACCOUNTANTS
© Habibullah & Co. Chartered Accountants, India
CHANGES IN FOREIGN DIRECT INVESTMENT POLICY
Sl. Sector Existing Regulations Liberalised Rules
1. Trading in food
products
manufactured /
produced in India
No regulation 100 per cent FDI under approval route for
trading, including through e-commerce, in
respect of food products manufactured/
produced in India
2. Defence FDI up-to 49 per cent allowed
under automatic route.
Beyond, 49 per cent under
approval route in cases where
such FDI was likely to result in:
a) Access to modern technology;
and
b) State of the art technology in
the country
FDI beyond 49 per cent under approval route
in cases where
 Such FDI is likely to result in access to
modern technology or for other
reasons to be recorded. The condition
of access to state-of-art technology in
the Country has been done away with.
 FDI limit has now been made
applicable to manufacturing of small
arms and ammunitions covered under
the Arms Act, 1959
3. Broadcasting
carriage services:
 Teleports
 Direct to
home
 Cable
Networks
 Mobile TV
 Headend-in
the Sky
Broadcasting
services
 Cable
networks
FDI was allowed up to 49 percent
under automatic route and
thereafter up to 100 percent
under approval route.
FDI is now allowed up to 100 per cent under
automatic route Infusion of fresh foreign
investment,
Beyond 49 per cent, in a company not
seeking license / permission from sectoral
ministry, resulting in change in ownership
pattern or transfer of stake by existing investor
to new Foreign investor, will require
government approval.
4. Pharmaceutical Greenfield projects – 100 per
cent FDI was allowed under
automatic route
Brownfield project – 100 per
cent FDI was allowed under
approval route
Greenfield projects – 100 per cent under
automatic route
Brownfield projects - FDI up-to 74 per cent
is allowed under automatic route.
Beyond 74 percent approval route would
continue to apply
5. Civil Aviation Airports
Greenfield projects –
100 per cent under automatic
route
Airports
Greenfield projects – 100 per cent under
automatic route
Brownfield project – 100 per cent under
automatic route.

2. HABIBULLAH & CO. CHARTERED ACCOUNTANTS
© Habibullah & Co. Chartered Accountants, India
Brownfield project –
74 per cent under automatic route
and thereafter, up to 100 per cent
under approval route.
Airport Transport Services
FDI up to 49 per cent under
automatic route
Airport Transport Services
FDI up-to 100 percent is allowed, up-to 49
percent under automatic route.
Beyond 49 percent through approval route
(other than in case of investment by foreign
airline, where FDI up to 49 per cent is allowed)
6. Private Security
Agencies
49 percent FDI was allowed
under approval route
FDI up-to 49 per cent under automatic route
and
Beyond 49 per cent and up-to 74 per cent
under approval route
7. Establishment of
branch office (BO),
liaison office (LO) or
project office (PO)
Separate clearance from Reserve
Bank of India / security clearance
was required for establishment of
BO/ LO/ PO in Defence, Telecom,
Private Security and Information
and Broadcasting sectors
This is most important amendment and
henceforth no such approval shall be required
in cases where approval is granted by Foreign
Investment Promotion Board (FIPB) or
concerned ministry / Regulator.
8. Animal Husbandry 100 percent FDI was allowed
under automatic route subject to
compliance with controlled
conditions
The controlled conditions prescribed have
been done away with.
9. Single Brand Retail
Trading
In cases involving FDI beyond 51
percent, 30 percent of value of
Goods purchased were to be
sourced from India.
The sourcing requirements have been
relaxed up to three years
For entities having ‘state-of-art’ and cutting
edge’ technology the sourcing norms have
been relaxed for another 5 years
Our Comments
As part of a second wave of big bang reforms, the government on 20th June approved 74% FDI in
brownfield pharma and 100% FDI in Greenfield projects, both under the automatic route
With the government giving the green signal to 100 per cent foreign direct investment (FDI) in trading
of food products manufactured or produced in India, including through e-commerce, we feel that the
measure will reduce wastage, curb inflation and will be beneficial for the farmers. India is the second
largest producer of fruits and vegetables in the world. However, it has very limited integrated cold chain
infrastructure and storage facilities, causing heavy losses to farmers in terms of wastage in quality and
quantity of the fruits and vegetables. This change is likely to benefit farmers paving way for creating
robust backend infrastructure and giving end consumers access to good quality food products.
The government announced sweeping changes in India's foreign direct investment policy, opening up
the airline business to 100 per cent ownership, relaxing rules for single brand retail and defence and

3. HABIBULLAH & CO. CHARTERED ACCOUNTANTS
© Habibullah & Co. Chartered Accountants, India
putting most sectors on the automatic approval route. The other changes on Defence, Single brand
retail trading are also likely to facilitate further foreign investment as some of the conditions acting as
impediment have been relaxed.
The above changes clearly exhibit the consistent approach of GoI in opening various sectors for foreign
Investment in India along with the measures taken improve ease of doing business in India. India is
now the most open economy in the world for foreign direct investment, Prime Minister Narendra Modi
said, hailing the new rules.
The above radical changes have opened the door for larger foreign investment in the country.
In a major amendment government has decided to do away with the requirement of separate security
clearance or Reserve Bank approval for setting up branches or liaison offices by foreign companies
dealing in defence, telecom, private security or information and broadcasting if the requisite approval
of the FIPB or the ministry or regulator concerned is in place.
Now most of the sectors would be under automatic approval route, except a small negative list and this
decision of Indian Government to further liberalise the FDI regime shall help to attain the objective of
providing major impetus to employment and job creation in India.

4. HABIBULLAH & CO. CHARTERED ACCOUNTANTS
© Habibullah & Co. Chartered Accountants, India
About Us
Habibullah & Co. (HCO) is a professional
services firm providing audit, assurance, tax,
financial advisory and consulting services to a
wide range of publicly traded and privately held
companies, guided by core values including
competence, honesty and integrity,
professionalism, dedication, responsibility and
accountability.
At HCO, the interests of our clients are
paramount. Our focus on the mid-market
means we have a real understanding of the
environment in which our clients operate and
are ideally placed to help them grow and
prosper.
Who we are and what we stand for
 Established 1962
 10 Partners
 100 + staff
 6 offices across India
 International Representation through
“Antea- Alliance of Independent Firms”
 Member Firm of The Institute of
Chartered Accountants of India since
1962
 Registered with all major Government
Regulators in India
Our Services
 Accounting and Auditing
 Business Setups in India
 Tax Compliance, Planning and
Management
 Transfer Pricing Advisory
 Business Advisory
Contact Us
For any assistance contact our Managing
Partner for International relations:
CA. Vivek Agarwal
E: vivek@hcoca.com
T: +91-98391-19370
Office in India
New Delhi
Lucknow
Gorakhpur
Patna
Ranchi
Varanasi
Mau
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Mumbai
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Agra
Email
info@hcoca.com
Website
www.hcoca.com
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Habibullah & Co. and no part of this can be reproduced
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please obtain professional advice before taking any
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