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Govt announces policy for foreign direct investment

The Indian government has decided to allow automatic clearance to foreign direct investment in all business activities, except a few sectors.

This means no governmental clearances would be required for investment in any sector, barring those related to national security.

Foreign firms seeking to buy more than 24 per cent stake in small scale firms would not be permitted automatic clearance. This is so because some products are reserved for manufacture in the small-scale sector.

Foreign companies eyeing new investments in a business area where they already have a tie-up in India, would not get automatic approval. Foreign investors and Non Resident Indians would also not be allowed automatic approval for acquisition of shares in an Indian company.

Foreign investment plans in state-run firms and export units would be given automatic clearance, subject to minor scrutiny.

Foreign investments in firms which exceep the cap on foreign stakes would also not get automatic clearance.

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