Sectoral Caps in Infrastructure Sector

The Government of India lays a special emphasis on upgrading the infrastructure services and with view to attract more investment in the infrastructure sector has been revising its policy. The highlights of major sectors are:

• Power
• Roads & Highways
• Ports & Harbours
• Telecommunication
• Insurance
• Civil Avaition
• Petroleum

Power

FDI is allowed upto 100% on automatic basis in electric generation, transmission and distribution (other than atomic reactor plants). There is no limit on the project cost and quantum of FDI.

Roads & Highways

FDI upto 100% under the automatic route is permitted in projects for construction and maintenance of roads, highways, vehicular bridges, toll roads and vehicular tunnels.

Ports & Harbours

FDI upto 100% under the automatic route is permitted for construction and maintenance of ports and harbours.

Telecommunication

FDI upto 49% is permitted in basic, Cellular Value Added Services and Global Mobile Personal Communications by satellite under the automatic route subject to licensing and security requirements and adherence by the companies (who are investing and the companies in which investment is being made) to the license conditions for foreign equity cap and lock in period for transfer and addition of equity and other license provisions. No equity cap is applicable to the manufacturing activities.

Foreign Direct Investment upto 100% is available for the following sectors in the telecom sector - ISPs not providing gateways (both for satellite and submarine cables); Infrastructure providers providing dark fibre (IP category I) ;Electronic Mail; and Voice Mail

The above would be subject to the following conditions:

• Foreign Direct Investment upto 100% is allowed subject to the condition that such company would divest 26% of their equity in favor of Indian public in 5 years, if these companies are listed in other parts of the world.
• The above services would be subject to licensing and security requirements, wherever required.
• The Foreign Investment Promotion Board shall on case-to-case basis consider proposals for beyond 49%.

Foreign Direct Investment upto 74% is permitted for Internet Service Providers with gateways; Radio paging and end-to-end Bandwidth subject to the licensing and security requirements. Proposals with Foreign Direct Investment beyond 49% shall require prior Government Approval.

Insurance

Foreign Equity Participation upto 26% is permitted under the Automatic Route subject to the condition that the Companies have obtained necessary license from the Insurance Regulatory and Development Authority (IRDA).

Civil Aviation

• Foreign Direct Investment upto 40% is permitted subject to no direct or indirect equity participation by Foreign Airlines.
• 100% investment by NRI/OCB's is allowed.
• The automatic route is not available.
• FDI upto 100% is permitted in Airports, with proposals above 74% requiring the prior approval of the Government of India.
  

Petroleum (other than refining)

Foreign Direct Investment upto 100% is allowed for small fields through competitive bidding; upto 60% for unincorporated JV; and upto 51% for incorporated JV with a No-Objection Certificate for medium size fields.

Foreign equity is allowed upto 51% is permitted for petroleum products and pipeline sector.

FDI upto 74% is permitted in infrastructure related to marketing and marketing of petroleum products.

100% Wholly Owned Subsidiary (WOS) is permitted for the purposes of market study and formulation.
100% wholly owned subsidiary is permitted for investment/ financing
For actual trading and marketing, minimum 26% Indian equity is required over 5 years.

(Please contact us for details on other sectors)