RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
FEMA NOTIFICATION
381/2016-RB, Dated: December 07, 2016
Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident
outside India) (Eighteenth Amendment) Regulations, 2016
G.S.R.1118(E).
- In exercise of the powers conferred by clause (b) of sub-section (3)
of Section 6 and Section 47 of the Foreign Exchange Management Act,
1999 (42 of 1999), the Reserve Bank of India hereby makes the following
amendments in the Foreign Exchange Management (Transfer or issue of
Security by a Person Resident outside India) Regulations, 2000
(Notification No. FEMA. 20/2000-RB dated 3rd May 2000) (hereinafter referred to as 'the Principal Regulations'), namely:-
1. Short Title & Commencement
(i) These Regulations may be called the Foreign Exchange Management
(Transfer or Issue of Security by a Person Resident outside India)
(Eighteenth Amendment) Regulations, 2016.
(ii) They shall come into force from the date of their publication in the Official Gazette.
2. Amendment to Schedule 1
In Annex B to Schedule 1 of the Foreign Exchange Management (Transfer
or Issue of Security by a Person Resident outside India) Regulations,
2000, (Notification No. FEMA 20/2000-RB dated 3rd May 2000), the following paragraphs shall be substituted with the following, namely:
SL. No
|
Sector/Activity
|
Foreign Investment Cap (%)
|
Entry Route
|
Agriculture
|
1.
|
Agriculture & Animal Husbandry
|
|
|
|
a) Floriculture, Horticulture and Cultivation of Vegetables & Mushrooms under controlled conditions;
b) Development and production of seeds and planting material;
c) Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture, Apiculture; and
d) Services related to agro and allied sectors.
Note: Other than the above, foreign investment is not allowed in any other agricultural sector/activity
|
100%
|
Automatic
|
1.1
|
Other Conditions
|
|
|
|
The term 'under controlled conditions' covers the following:
(i) 'Cultivation under controlled conditions' for the categories of
floriculture, horticulture, cultivation of vegetables and
mushrooms is the practice of cultivation wherein rainfall, temperature,
solar radiation, air humidity and culture medium are
controlled artificially. Control in these parameters may be effected
through protected cultivation under green houses, net houses,
poly houses or any other improved infrastructure facilities
where micro-climatic conditions are regulated anthropogenically.
|
5
|
Manufacturing
|
100%
|
Automatic
|
|
Subject
to the provisions of these Regulations, foreign investment in
'manufacturing' sector is under automatic route. Further, a
manufacturer is permitted to sell its products manufactured in India
through wholesale and/or retail, including through e-commerce
without Government approval. Notwithstanding the foreign
investment policy provisions on trading sector, 100% foreign investment
under Government approval route is allowed for trading,
including through e-commerce, in respect of food products
manufactured and/or produced in India. Applications for foreign
investment in food products retail trading would be processed
in the Department of Industrial Policy & Promotion before being
considered by the Government for approval.
|
6.
|
Defence
|
6.1
|
Defence
Industry subject to Industrial license under the Industries
(Development & Regulation) Act, 1951; and Manufacturing of
small arms and ammunition under the Arms Act, 1959
|
100%
|
Automatic route up to 49%
Government route beyond 49% wherever it is likely to result
in access to modern technology or for other reasons to
be recorded.
|
6.2
|
Other Conditions
|
|
i.
Infusion of fresh foreign investment within the permitted automatic
route level, in a company not seeking industrial license,
resulting in change in the ownership pattern or transfer of stake by
existing investor to new foreign investor, will require
Government approval.
ii. Licence applications will be considered and licences given by the
Department of Industrial Policy & Promotion, Ministry of
Commerce & Industry, in consultation with Ministry of Defence and
Ministry of External Affairs.
iii. Foreign investment in the sector is subject to security clearance and guidelines of the Ministry of Defence.
iv. Investee company should be structured to be self-sufficient in
areas of product design and development. The investee/joint
venture company along with manufacturing facility, should also
have maintenance and life cycle support facility of the product being
manufactured in India.
|
Services Sector
|
Information Services
|
7.
|
Broadcasting
|
7.1
|
Broadcasting Carriage Services
|
7.1.1
|
(1) Teleports (setting up of up-linking HUBs/Teleports);
(2) Direct to Home (DTH);
(3) Cable Networks (Multi System Operators (MSOs) operating
at National or State or District level and
undertaking upgradation of networks towards digitalization and
addressability):
(4) Mobile TV;
(5) Headend-in-the Sky Broadcasting Service (HITS)
|
100%
|
Automatic
|
7.1.2
|
Cable Networks
(Other MSOs not undertaking upgradation of networks
towards digitalization and addressability and Local Cable
Operators (LCOs)).
|
100%
|
Automatic
|
|
Note:
Infusion of fresh foreign investment, beyond 49% in a company not
seeking license/permission from sectoral Ministry, resulting
in change in the ownership pattern or transfer of stake by existing
investor to new foreign investor, will require Government approval
|
9.
|
Civil Aviation
|
9.2
|
Airports
|
|
|
|
(a) Greenfield projects
(b) Existing projects
|
100%
100%
|
Automatic
Automatic
|
16.3
|
Single Brand Retail trading (SBRT)
|
100%
|
Automatic up to 49%. Government route beyond 49%
|
|
1)
Foreign Investment in Single Brand product retail trading is aimed at
attracting investments in production and marketing, improving
the availability of such goods for the consumer, encouraging
increased sourcing of goods from India, and enhancing competitiveness of
Indian enterprises through access to global designs,
technologies and management practices.
2) Foreign investment in Single Brand product retail trading would be subject to the following conditions:
a) Products to be sold should be of a 'Single Brand' only.
b) Products should be sold under the same brand internationally i.e.
products should be sold under the same brand in one or
more countries other than India.
c) 'Single Brand' product retail trading would cover only products which are branded during manufacturing.
d) A non-resident entity or entities, whether owner of the brand or
otherwise, shall be permitted to undertake 'single brand'
product retail trading in the country for the specific brand, directly
or through a legally tenable agreement with the brand owner
for undertaking single brand product retail trading. The
onus for ensuring compliance with this condition will rest with the
Indian entity carrying out single brand product retail trading
in India. The investing entity shall provide evidence to
this effect at the time of seeking approval, including a copy of the
licensing/franchise/sub-licence agreement, specifically
indicating compliance with the above condition. The
requisite evidence should be filed with the RBI for the automatic route
and SIA/FIPB for cases involving approval.
e) In respect of proposals involving foreign investment beyond 51%,
sourcing of 30% of the value of goods purchased, will be
done from India, preferably from MSMEs, village and cottage
industries, artisans and craftsmen, in all sectors. The quantum of
domestic sourcing will be self-certified by the company, to
be subsequently checked, by statutory auditors, from the
duly certified accounts which the company will be required to maintain.
This procurement requirement would have to be met, in the
first instance, as an average of five years' total value of the
goods purchased, beginning 1st April of the year of the commencement of
the business i.e. opening of the first store. Thereafter, it would have
to be met on an annual basis. For the purpose of ascertaining
the sourcing requirement, the relevant entity would be the
company, incorporated in India, which is the recipient of foreign
investment for the purpose of carrying out single brand product
retail trading.
f) Subject to the conditions mentioned in this Para, a single brand
retail trading entity operating through brick and mortar
stores, is permitted to undertake retail trading through e-commerce.
3) Application seeking permission of the Government for foreign
investment exceeding 49% in a company which proposes to
undertake single brand retail trading in India would be made to the
Secretariat for Industrial Assistance (SIA) in the Department of
Industrial Policy & Promotion. The applications would
specifically indicate the product/product categories which are proposed
to be sold under a 'Single Brand'. Any addition to the
product/product categories to be sold under 'Single Brand'
would require a fresh approval of the Government. In case of foreign
investment up to 49 %, the list of products/product categories
proposed to be sold except food products would be provided to
the RBI.
4) Applications would be processed in the Department of Industrial
Policy & Promotion, to determine whether the proposed
investment satisfies the notified guidelines, before being considered by
the FIPB for Government approval.
Note:
i. Conditions mentioned at Para (2) (b) & (2) (d) above will not be
applicable for undertaking Single Brand Retail Trading
(SBRT) of Indian brands.
ii. An Indian manufacturer is permitted to sell its own branded
products in any manner i.e. wholesale, retail, including
through e-commerce platforms.
iii. Indian manufacturer would be the investee company, which is the
owner of the Indian brand and which manufactures in India,
in terms of value, at least 70% of its products in-house, and
sources, at most 30% from Indian manufacturers.
iv. Indian brands should be owned and controlled by resident Indian
citizens and/or companies which are owned and controlled
by resident Indian citizens.
v. Sourcing norms will not be applicable up to three years from
commencement of the business i.e. opening of the first
store for entities undertaking single brand retail trading of products
having 'state-of-art' and 'cutting-edge' technology and
where local sourcing is not possible.
Thereafter, provisions of Para (2) (e) above will be applicable.
|
17.
|
Pharmaceuticals
|
|
|
17.1
|
Greenfield
|
100%
|
Automatic
|
17.2
|
Brownfield
|
100%
|
Automatic up to 74% Government route beyond 74%
|
17.3
|
Other Conditions
|
|
(i)
'Non-compete' clause would not be allowed in automatic or government
approval route except in special circumstances with the
approval of the Foreign Investment Promotion Board (FIPB).
(ii) The prospective investor and the prospective investee are required
to provide a certificate along with the FIPB application as
given at Para 17.4.
(iii) Government may incorporate appropriate conditions for foreign
investment in brownfield cases, at the time of granting
approval.
(iv) foreign investment in brownfield pharmaceuticals, under both
automatic and government approval routes, is further subject
to compliance of following conditions:
a) The production level of National List of Essential Medicines (NLEM)
drugs and/or consumables and their supply to the domestic
market at the time of induction of foreign investment,
being maintained over the next five years at an absolute quantitative
level. The benchmark for this level would be decided with
reference to the level of production of NLEM drugs and/or
consumables in the three financial years, immediately preceding the year
of induction of foreign investment. Of these, the highest
level of production in any of these three years would be
taken as the level.
b) Research and Development (R&D) expenses being maintained in
value terms for 5 years at an absolute quantitative level at
the time of induction of foreign investment. The benchmark
for this level would be decided with reference to the highest level of
R&D expenses which has been incurred in any of the three
financial years immediately preceding the year of induction
of foreign investment.
c) The administrative Ministry will be provided complete information
pertaining to the transfer of technology, if any, along with
induction of foreign investment into the investee company.
d)
The administrative Ministry (s) i.e. Ministry of Health and Family
Welfare, Department of Pharmaceuticals or any other regulatory
Agency/Development as notified by Central Governemnt from
time to time, will monitor the compliance of conditionalities.
Note :
i. foreign investment up to 100% under the automatic route is permitted
for manufacturing of medical devices. The above mentioned
conditions will, therefore, not be applicable to greenfield as well as
brownfield projects of this industry.
ii. Medical device means :-
a) Any instrument, apparatus, appliance, implant, material or other
article, whether used alone or in combination, including
the software, intended by its manufacturer to be used specially for
human beings or animals for one or more of the specific
purposes of :-
(aa) Diagnosis, prevention, monitoring, treatment or alleviation of any disease or disorder;
(ab) diagnosis, monitoring, treatment, alleviation of, or assistance for, any injury or handicap;
(ac) investigation, replacement or modification or support of the anatomy or of a physiological process;
(ad) supporting or sustaining life;
(ae) disinfection of medical devices;
(af) control of conception;
and which does not achieve its primary intended action in or on the
human body or animals by any pharmacological or
immunological or metabolic means, but which may be assisted in its
intended function by such means;
b) an accessory to such an instrument, apparatus, appliance, material or other article;
c) a device which is reagent, reagent product, calibrator, control
material, kit, instrument, apparatus, equipment or
system whether used alone or in combination thereof intended to be used
for examination and providing information for medical or
diagnostic purposes by means of in vitro examination of
specimens derived from the human body or animals.
iii. The definition of medical device at Note (ii) above would be
subject to the amendment in Drugs and Cosmetics Act, 1940, as
amended from time to time.
|
17.4
|
Certificate to be Furnished by the Prospective Investor as well as the Prospective Recipient Entity
It is certified that the following is the complete list of all inter-se
agreements, including the shareholders agreement, entered into
between foreign investor(s) and investee brownfield pharmaceutical
entity
1. ………………
2. ……………….
3. ……………….
(copies of all agreements to be enclosed)
It is also certified that none of the inter-se agreements, including
the shareholders agreement, entered into between foreign
investor(s) and investee brownfield pharmaceutical entity contain any
non-compete clause in any form whatsoever.
It is further certified that there are no other contracts/agreements
between the foreign investor(s) and investee brownfield pharma
entity other than those listed above.
The foreign investor(s) and investee brownfield pharma entity undertake
to submit to the FIPB any inter-se agreements that may be
entered into between them subsequent to the submission and
consideration of this application.
|
[No. 1/16/EM/2016]
(Rohit Jain)
Chief General Manager
Foot Note:-
The Principal Regulations were published in the Official Gazette vide
G.S.R. No.406 (E) dated May 8, 2000 in Part II, Section 3, Sub-section
(i) and subsequently amended as under:-
G.S.R.No. 158(E) dated 02.03.2001
G.S.R.No. 175(E) dated 13.03.2001
G.S.R.No. 182(E) dated 14.03.2001
G.S.R.No. 4(E) dated 02.01.2002
G.S.R.No. 574(E) dated 19.08.2002
G.S.R.No. 223(E) dated 18.03.2003
G.S.R.No. 225(E) dated 18.03.2003
G.S.R.No. 558(E) dated 22.07.2003
G.S.R.No. 835(E) dated 23.10.2003
G.S.R.No. 899(E) dated 22.11.2003
G.S.R.No. 12(E) dated 07.01.2004
G.S.R.No. 278(E) dated 23.04.2004
G.S.R.No. 454(E) dated 16.07.2004
G.S.R.No. 625(E) dated 21.09.2004
G.S.R.No. 799(E) dated 08.12.2004
G.S.R.No. 201(E) dated 01.04.2005
G.S.R.No. 202(E) dated 01.04.2005
G.S.R.No. 504(E) dated 25.07.2005
G.S.R.No. 505(E) dated 25.07.2005
G.S.R.No. 513(E) dated 29.07.2005
G.S.R.No. 738(E) dated 22.12.2005
G.S.R.No. 29(E) dated 19.01.2006
G.S.R.No. 413(E) dated 11.07.2006
G.S.R.No. 712(E) dated 14.11.2007
G.S.R.No. 713(E) dated 14.11.2007
G.S.R.No. 737(E) dated 29.11.2007
G.S.R.No. 575(E) dated 05.08.2008
G.S.R.No. 896(E) dated 30.12.2008
G.S.R.No. 851(E) dated 01.12.2009
G.S.R.No. 341 (E) dated 21.04.2010
G.S.R.No. 821 (E) dated 10.11.2012
G.S.R.No. 606(E) dated 03.08.2012
G.S.R.No. 795(E) dated 30.10.2012
G.S.R.No. 796(E) dated 30.10.2012
G.S.R. No. 797(E) dated 30.10.2012
G.S.R.No. 945 (E) dated 31.12.2012
G.S.R. No.946(E) dated 31.12.2012
G.S.R. No.38(E) dated 22.01.2013
G.S.R.No.515(E) dated 30.07.2013
G.S.R.No.532(E) dated 05.08.2013
G.S.R. No.341(E) dated 28.05.2013
G.S.R.No.344(E) dated 29.05.2013
G.S.R. No.195(E) dated 01.04.2013
G.S.R.No.393(E) dated 21.06.2013
G.S.R.No.591(E) dated 04.09.2013
G.S.R.No.596(E) dated 06.09.2013
G.S.R.No.597(E) dated 06.09.2013
G.S.R.No.681(E) dated 11.10.2013
G.S.R.No.682(E) dated 11.10.2013
G.S.R. No.818(E) dated 31.12.2013
G.S.R. No.805(E) dated 30.12.2013
G.S.R.No.683(E) dated 11.10.2013
G.S.R.No.189(E) dated 19.03.2014
G.S.R.No.190(E) dated 19.03.2014
G.S.R.No.270(E) dated 07.04.2014
G.S.R.No. 361 (E) dated 27.05.2014
G.S.R.No.370(E) dated 30.05.2014
G.S.R.No.371(E) dated 30.05.2014
G.S.R.No. 435 (E) dated 08.07.2014
G.S.R.No. 400 (E) dated 12.06.2014
G.S.R.No. 436 (E) dated 08.07.2014
G.S.R.No. 487 (E) dated 11.07.2014
G.S.R.No. 632 (E) dated 02.09.2014
G.S.R.No. 798 (E) dated 13.11.2014
G.S.R.No. 799 (E) dated 13.11.2014
G.S.R.No. 800 (E) dated 13.11.2014
G.S.R.No. 829 (E) dated 21.11.2014
G.S.R.No. 906(E) dated 22.12.2014
G.S.R.No. 914 (E) dated 24.12.2014
G.S.R.No. 30 (E) dated 14.01.2015
G.S.R.No. 183 (E) dated 12.03.2015
G.S.R.No. 284 (E) dated 13.04.2015
G.S.R.No. 484 (E) dated 11.06.2015
G.S.R.No. 745 (E) dated 30.09.2015
G.S.R.No. 759 (E) dated 06.10.2015
G.S.R.No. 823 (E) dated 30.10.2015
G.S.R.No. 858 (E) dated 16.11.2015
G.S.R.No. 983 (E) dated 17.12.2015
G.S.R.No. 165 (E) dated 15.02.2016
G.S.R.No. 166 (E) dated 15.02.2016
G.S.R.No. 369 (E) dated 30.03.2016
G.S.R.No. 465 (E) dated 28.04.2016
G.S.R.No. 537 (E) dated 20.05.2016
G.S.R.No. 879 (E) dated 09.09.2016
G.S.R.No. 1002 (E) dated 24.10.2016
G.S.R.No. 1003 (E) dated 24.10.2016
G.S.R.No. 1015 (E) dated 27.10.2016
G.S.R.No. 1042 (E) dated 04.11.2016
|