27 June 2016
INDIA: Liberalised FDI Rules Introduced for Food, Pharmaceuticals and Other Key Sectors
The Indian government has announced a new set of rules governing foreign direct investment (FDI) in several key sectors, including civil aviation, defence, single brand retail, pharmaceuticals and food products. The new rules either remove existing FDI requirements, such as prior government approval, or increase the existing FDI cap. The most significant changes for Hong Kong companies include:
- Single Brand Retail: Those foreign single brand retailers deemed to be state-of-the-art and considered to be making use of cutting-edge technology will be entitled to waive the 30% local content requirement for up to three year. It will also be possible to extend this for an additional five years.
- Food Products: Following prior government approval, 100% FDI will be permitted in the trading of all food products made in India. This includes trading via e-commerce platforms.
- Pharmaceuticals: In the case of brownfield pharmaceutical projects, foreign investors will be allowed to acquire stakes of up to 74% in Indian drug manufacturing companies without prior government approval. With greenfield pharmaceutical initiatives, 100% FDI through the automatic route will continue to be permitted.