India Budget Series


-100% FDI shall be allowed in Asset Reconstruction Companies (‘ARC’s’) through automatic route. Corresponding amendments to the SARFESI Act have been proposed.

-Foreign portfolio investors (‘FPIs’) shall be allowed up to 100 per cent of each tranche in securities receipts issued by ARC’s subject to sectoral caps.

-FDI cap in Insurance sector was increased from 26% to 49% in November 2015. In the insurance and pension sectors, the government announced that foreign investment shall be allowed through automatic route for up to 49 per cent subject to the guidelines on Indian management and control, to be verified by the regulators.

-100% FDI, with clearance from the Foreign Investment Promotion Board (‘FIPB’), shall be allowed in marketing of food products produced and manufactured in India.

-Investment limit for foreign entities in Indian stock exchanges shall be increased from 5% to 15% subject to guidelines to be issued by SEBI.

-It is also proposed to provide residential status to foreign investors with investments beyond specified limits, which will go beyond 5 year visas. This is being done to reduce the compliance burden.

-It is further proposed to introduce a Centre-State Investment Agreement. This proposal is in the light of the International Bilateral Investment Treaties signed by India with other countries. Implementation and ratification of the obligations under these treaties would be facilitated by the ‘Centre-State investment agreement’. Further, it will also ensure equal participation of the States and will provide additional impetus to foreign investments.

-Existing 24% limit for investment by FPIs in Central Public Sector Enterprises, other than Banks, listed in stock exchanges, shall be increased to 49%.



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