The Government of India has issued Consolidated FDI Policy Circular of 2015 [FDI Policy Circular]  on 12 May 2015 which subsumes all press notes/clarifications/press release in relation to foreign direct  investment [FDI] issued by Department of Industrial Policy & Promotion, Ministry of Commerce &  Industry, Government of India [DIPP], which were in force as on May 11, 2015 and reflects the FDI  policy as on date. The key updations made in the FDI Policy Circular are highlighted below:


For railways infrastructure, 100% under Automatic Route is permitted in construction, operation and  maintenance of the following: (i) Suburban corridor projects through PPP, (ii)  High speed train projects, (iii) Dedicated freight lines, (iv) Rolling stock including train sets, and locomotives/coaches manufacturing and maintenance facilities, (v) Railway Electrification, (vi)  Signaling systems, (vii) Freight terminals, (viii) Passenger terminals, (ix) Infrastructure in industrial park pertaining to  railway  line/ sidings including electrified railway lines and connectivity to main railway line and (x) Mass Rapid Transport Systems. Proposals involving FDI beyond 49% will be considered on a case to case basis.


In insurance sector, sectoral cap has been raised to 49% from 26%, with upto 26% under Automatic Route, and upto 49% under Government Route. The aggregate holdings by way of total foreign investment in its equity shares by  foreign investors, including portfolio investors, cannot exceed 49% of the paid-up equity capital  of the Indian insurance company.


FDI under defense sector is permitted upto 49% under government route, up from 26%.FPI investment  is also permitted. Portfolio investment by FPIs/ FIIs/ NRIs/ QFIs and investments by FVCIs together is limited to 24% of the total equity of the investee/ joint venture company. Chief Security Officer (CSO) of the investee/ joint-venture company should be resident Indian citizen. Investee/  joint-venture Company should be structured to be self- sufficient in areas of product design and  development. The investee/ joint-venture company should also have maintenance and life cycle  support facility of the product being manufactured in India. Proposals for FDI beyond 49% (formerly 26%) with proposed inflow in excess of INR 2000 crores (formerly 1200 crores), which are to be approved by Cabinet Committee on Security will not require further approval of the Cabinet Committee on Economic Affairs (CCEA).


FDI up to 100% under the automatic route is permitted for manufacturing of medical devices.

Depository Receipt

Depository Receipts will be governed by the new Depository Receipts Scheme, 2014 issued by Reserve  Bank of India on December 15, 2014.

Issue of shares

Under the FDI Policy 2015, the price of the shares issued will be determined as per the fair  valuation of shares by a SEBI registered Merchant Banker or a Chartered Accountant as per any  internationally accepted pricing methodology on arm’s length basis, where the shares of the company are not listed on any recognized stock exchange in India. 

Acquisition of shares under scheme of merger or amalgamation

FIPB approval would not be required in case of ESOPs or mergers and acquisitions taking place in  sectors under automatic route.


FIPB would consider proposals with foreign equity inflow of and below INR 2000 crores, up from the  earlier limit of INR 1200 crore. The recommendations of FIPB on proposals with total foreign equity inflow of more than INR 2000 crores would be placed for consideration of Cabinet Committee on Economic Affairs (CCEA). No fresh approval will be required for any additional foreign investment beyond the approved investment limits subject to the condition thatthe approved foreign equity percentage is maintained.

Filing of FC-TRS for the transactions on the stock exchanges

It has been clarified that in cases where the non-resident investor, including an NRI, acquires shares on the stock exchanges under the FDI scheme, the responsibility of filing FC-TRS with the AD Category-I bank would be that of the investee company and not of transferor or transferee.


VA View

Issue of FDI policy by Government of India is an annual routine affair. The Government is opening more and more sectors and is taking steps towards hassle free entry of investors. The increasing of threshold limit for proposals to be placed before CCEA is a welcome step.