Consolidated FDI Policy Circular of 2020

Paragraph 5.2 Permitted Sectors

Chapter: 5 · Sector Specific Conditions on FDI
Text as on: As issued 15 October 2020; Press Notes since are not applied

5.2 PERMITTED SECTORS

a) 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 up to100% 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.

b) Sectoral cap i.e. the maximum amount which can be invested by foreign investors in an entity, unless provided otherwise, is composite and includes all types of foreign investments, direct and indirect, regardless of whether the said investments have been made under Schedules I (FDI), II (FPI), III (NRI), VI (LLPs), VII (FVCI), VIII(Investment Vehicles), and IX (DRs), respectively, of Foreign Exchange Management (Non-Debt Instruments) Rules, 2019. FCCBs and DRs having underlying of instruments which can be issued under Schedule IX, being in the nature of debt, shall not be treated as foreign investment. However, any equity holding by a person resident outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned as foreign investment under the composite cap.

c) Foreign investment in sectors under Government approval route resulting in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities will be subject to Government approval. Foreign investment in sectors under automatic route but with conditionalities, resulting in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities, will be subject to compliance of such conditionalities.

d) The sectors which are already under 100% automatic route and are without conditionalities would not be affected.

e) Notwithstanding anything contained in paragraphs a) and c) above, portfolio investment, up to aggregate foreign investment level as permitted under Schedule II of Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 will not be subject to either Government approval or compliance of sectoral conditions, as the case may be, if such investment does not result in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities. Other foreign investments will be subject to conditions of Government approval and compliance of sectoral conditions as laid down in the FDI policy.

f) Total foreign investment, direct and indirect, in an entity will not exceed the sectoral/statutory cap.

g) Any existing foreign investment already made in accordance with the policy in existence would not require any modification to conform to amendments introduced through Press Note 8 (2015 Series).

h) Wherever the foreign investor wishes to specify a particular auditor/audit firm having international network for the Indian investee company, then audit of such investee companies should be carried out as joint audit wherein one of the auditors should not be part of the same network.

i) The onus of compliance of above provisions will be on the investee company. AGRICULTURE

5.2 PERMITTED SECTORS

a) 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 up to100% 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.

b) Sectoral cap i.e. the maximum amount which can be invested by foreign investors in an
       entity, unless provided otherwise, is composite and includes all types of foreign
       investments, direct and indirect, regardless of whether the said investments have been
       made under Schedules I (FDI), II (FPI), III (NRI), VI (LLPs), VII (FVCI), VIII(Investment
       Vehicles), and IX (DRs), respectively, of Foreign Exchange Management (Non-Debt
       Instruments) Rules, 2019. FCCBs and DRs having underlying of instruments which can
       be issued under Schedule IX, being in the nature of debt, shall not be treated as foreign
       investment. However, any equity holding by a person resident outside India resulting
       from conversion of any debt instrument under any arrangement shall be reckoned as
       foreign investment under the composite cap.

c) Foreign investment in sectors under Government approval route resulting in transfer of
       ownership and/or control of Indian entities from resident Indian citizens to non-
       resident entities will be subject to Government approval. Foreign investment in sectors
       under automatic route but with conditionalities, resulting in transfer of ownership
       and/or control of Indian entities from resident Indian citizens to non-resident entities,
       will be subject to compliance of such conditionalities.

d) The sectors which are already under 100% automatic route and are without
       conditionalities would not be affected.

e) Notwithstanding anything contained in paragraphs a) and c) above, portfolio
       investment, up to aggregate foreign investment level as permitted under Schedule II of
       Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 will not be subject
       to either Government approval or compliance of sectoral conditions, as the case may be,
       if such investment does not result in transfer of ownership and/or control of Indian
       entities from resident Indian citizens to non-resident entities. Other foreign investments
       will be subject to conditions of Government approval and compliance of sectoral
       conditions as laid down in the FDI policy.

f) Total foreign investment, direct and indirect, in an entity will not exceed the
       sectoral/statutory cap.

g) Any existing foreign investment already made in accordance with the policy in
       existence would not require any modification to conform to amendments introduced
       through Press Note 8 (2015 Series).

h) Wherever the foreign investor wishes to specify a particular auditor/audit firm having
       international network for the Indian investee company, then audit of such investee
       companies should be carried out as joint audit wherein one of the auditors should not
       be part of the same network.

i) The onus of compliance of above provisions will be on the investee company.
AGRICULTURE