Tuesday, December 9, 2014

RBI notifies new FDI policy for defence, railways infra

The Reserve Bank today notified the government's decision to increase foreign investment ceiling in defence sector and permitting 100 per cent in infrastructure.

After assuming power, the government has reviewed Foreign Direct Investment (FDI) policy for railways sector as well as defence.

Government has permitted 100 per cent FDI in railway infrastructure sector under the automatic route subject to conditions.

In the defence sector, foreign investment (FDI, FIIs, RFPIs, NRIs, FVCIs and QFIs) up to 49 per cent has been permitted under government route (FIPB) in the defence sector. The earlier cap was 26 per cent.

As per the revised policy for defence sector, portfolio investment (RFPI/FII/NRI/QFI) and FVCI investment will not exceed 24 per cent of the total equity of the investee company. Portfolio investment will be under the automatic route.

In the railway segment, FDI will be allowed in construction, operation and maintenance of suburban corridor projects through PPP, high speed train projects and dedicated freight lines.

FDI has also been allowed in rolling stock including train sets, and locomotives/coaches manufacturing and maintenance facilities, railway electrification, signaling systems, freight terminals and passenger terminals, among others.

As per the policy for railway sector, FDI beyond 49 of the equity of the investee company in sensitive areas from security point of view will be brought before the Cabinet Committee on Security (CCS) for consideration on a case to case basis.


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