Recent Liberalization Of FDI Policy – An Update

I. Background

Foreign investment, comprising, amongst others, of foreign direct investment (FDI) and portfolio investment, in India is regulated by the (Indian) Foreign Exchange Management Act, 1999 (FEMA). Additionally, the Government of India, from time to time, notifies its policy on FDI and prescribes the sectoral caps and other conditions for FDI. The current FDI policy is reflected in the consolidated FDI policy circular of 2016 dated June 07, 2016 and the subsequent press notes issued by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India that are available at www.dipp.nic.in (FDI Policy). The FDI Policy subsumes and supersedes all previous policies relating to FDI in India and reflects the FDI policy effective as on date. The FDI Policy is adopted by the Reserve Bank of India (RBI), regulator for foreign exchange transactions, and notified under relevant regulations under FEMA (FEMA Regulations).