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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.[1] 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.


[1]  Press Release, The Prime Minister’s Office, Government of India, 20 June 2016


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