Foreign Direct Investment (FDI) policy in India is featured by several regulations aimed at availing maximum benefits from FDI. An important component of the regulation is setting limits for FDI in different sectors in accordance with the priourities set.

Policy FDI limit in various sectors of the Economy (Consolidated FDI Policy)

The government has set limits for equity investment in each sector, specifying the limit of shareholding. These sectoral limits are generally, up to 26%, up to 49%, up to 74% and in100% of the shareholding in entities. In the initial period, FDI was allowed only up to 26% or 49% because of slow reforms. With more liberalisation of the FDI Policy, 100% FDI has been allowed in most of the sectors.

The FDI policy regulation is frequently updated by the government by making further and further liberalisation. Here, the following part gives FDI sectoral limits in different sectors as per the Consolidated FDI policy of 2020. Later, minor updations are made to face the changing situations.

Defence, ecommerce, civil aviation, banking, retail trading, pharmaceutical, insurance etc. are the sectors that attracted constant regulatory changes. The following section illustrates sectoral limits for FDI.

Read: Automatic and Approval Route in FDI

  1. FDI in civil aviation

Civil Aviation sector includes Airports, Scheduled and Non-Scheduled domestic passenger airlines, helicopter services/Seaplane services, Ground Handling Services, Maintenance and Repair organisations; Flying training institutes; and Technical training institutions.

FDI limits and regulations the Civil Aviation Sector
1. Civil Aviation subsector/activity % of equity/FDI Cap Entry Route
(a)  Airport – green field projects 100% Automatic
(b)  Existing projects 100% Automatic
2. Air transport services
(a)  Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline

Regional Air Transport Service

100% Automatic up to 49% (up to 100% and automatic for NRls), Government route beyond 49%.
(b)  Non-Scheduled Air Transport Services 100% Automatic
(c)  Helicopter services/seaplane services requiring DGCA approval 100% Automatic
3. Other services under CA
(a)  Ground Handling Services 100% Automatic
(b) Maintenance and Repair organizations etc 100% Automatic
  1. FDI Policy in the insurance sector

The insurance sector FDI limit has been made under the automatic route up to 49%. For LIC, the limit proposed is 20% under approval route.

FDI limits and regulations the Insurance Sector
1. Insurance sector/activity % of equity/FDI Cap Entry Route
Insurance Company 74% Automatic
Intermediaries or Insurance Intermediaries 100% Automatic
LIC (proposed) 20% Approval
The government is planning to change the FDI policy by restricting FDI in LIC to 20% under approval route.
  1. FDI Policy in Coal Mining sector
FDI limits and regulations the Coal Mining Sector
1. Coal and lignite % of equity/FDI Cap Entry Route
(a)   Coal & Lignite mining for captive consumption by sector such as iron & steel and cement units and other eligible activities permitted under the respective Acts. 100% Automatic
(b)  Setting up coal processing plants like washeries 100% Automatic
(c)   Processing infrastructure related to coal and coal mining. 100% Automatic
  1. Manufacturing

The 2019 amendment of the FDI policy adds contract manufacturing. As per the FDI policy, foreign investment in ‘manufacturing’ sector has been put under automatic route. Here, manufacturing activities may be either (a) self-manufacturing by the investee entity or (b) contract manufacturing in India through a legally tenable contract. Besides, the manufacturer is permitted to sell its products manufactured in India through wholesale and/ or retail, including through e-commerce, without Government approval.

(a)   Defence manufacturing

In the case of defence manufacturing, the prevailing policy is to allow FDI upto 49% through automatic route, but as part of the Atmanirbhar Bharat, the government raised this limit to 74%. Defence FDI is subject to other conditions.

Defence manufacturing % of equity/FDI Cap Entry Route
Defence industry subject to industrial licensing 100% Automatic upto 74%, Government route beyond that wherever it is likely to result in access to modern technology or for other reasons.
  1. Broadcasting: Broadcasting contains different subcategories and the sectoral limits are mentioned below.
1. Broadcasting Carriage Services % of equity/FDI Cap Entry Route
Teleports, DTH, Mobile TV, Headend in the Sky Broadcasting Service, Cable Networks 100% Automatic
2. Broadcasting content service
Terrestrial Broadcasting FM (FM Radio), 49% Government
Up-linking of ‘News & Current Affairs’ TV Channels 49% Government
Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels 100% Automatic
  1. Print Media
Print media % of equity/FDI Cap Entry Route
Publishing of newspaper and periodicals dealing with news and current affairs 26% Government
Publication of Indian editions of foreign magazines dealing with news and current affairs 26% Government
  1. Digital Media
Sector % of equity/FDI Cap Entry Route
Uploading/ Streaming of News & Current Affairs through Digital Media 26% Government
  1. Banking Sector and ARCs
Category % of equity/FDI Cap Entry Route
Private Sector Banks 74% Automatic up to 49%

Government route beyond 49% and up to 74%.

Public Sector Banks 20% Government
Asset Reconstruction Companies 100% Automatic
  1. Other financial services
Financial services regulated by regulators % of equity/FDI Cap Entry Route
Financial Services activities regulated by financial sector regulators, viz., RBI, SEBI, IRDA, PFRDA, NHB or any other financial sector regulator as may be notified by the Government of India. 100 % Automatic
While label ATMs 100 % Automatic
Credit information companies 100 % Automatic
Infrastructure companies in the securities market 49% Automatic
  1. Pharmaceuticals
Pharmaceuticals % of equity/FDI Cap Entry Route
Greenfield 100% Automatic
Brownfield 100% Automatic up to 74%

Government route beyond 74%

  1. Power exchanges
Power Exchanges % of equity/FDI Cap Entry Route
Power Exchanges registered under the CERC Regulations, 2010. 49% Automatic
  1. Railway infrastructure
Railway infrastructure % of equity/FDI Cap Entry Route
Railway infrastructure 100% Automatic


  1. Pension sector
Pension sector % of equity/FDI Cap Entry Route
Pension 49% Government
  1. Ecommerce activities

Ecommerce entities would engage only in Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce. FDI is allowable only in the marketplace model.

Sector % of equity/FDI Cap Entry Route
Ecommerce activities 100% Automatic
  1. Trading

In the case of multi-brand retail trading the existing limits are allowed with conditions.

Sector % of equity/FDI Cap Entry Route
Multi-brand retail trading 51%  Government
Single Brand product retail trading 100% Automatic up to 49%

Government route beyond 49%

Cash & Carry Wholesale Trading/Wholesale Trading 100% Automatic
  1. Telecom sector
Telecom services % of equity/FDI Cap Entry Route
All telecom services 100% Automatic up to 49%, Government route beyond 49%
  1. Plantations and Agriculture

Plantation sector: besides the above, FDI is not allowed in any of the plantation sectors.

Plantation sector  % of equity/FDI Cap Entry Route
(i)Tea sector including tea plantations

(ii) Coffee plantations

(iii) Rubber plantations

(iv) Cardamom plantations

(v) Palm oil tree plantations

(vi) Olive oil tree plantations

100% Automatic
Agriculture and Animal Husbandry 100% Automatic
  1. Other sectors
Sector % of equity/FDI Cap Entry Route
Petroleum and natural gas 100% Automatic
Industrial Parks 100% Automatic
Satellites- establishment and operation, subject to the sectoral guidelines of Department of Space/ISRO 100% Government
Private Security Agencies 74% Automatic up to 49%

Government route beyond 49% and up to 74%

Construction Development: Townships, Housing, Built-up Infrastructure 100% Automatic

Source: Consolidated FDI Policy 2020.

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