Government allows 100 per cent FDI in e-commerce
New Delhi: In a major move that will spur foreign direct investment (FDI), the government today announced that it has raised the foreign direct investment ceiling in e-commerce and petroleum refining to 100 per cent from 49 per cent. It also abolished the Rs 1,500-crore investment limit for power projects.

The dividend balancing norms imposed on foreign investors engaged in production of consumer goods has also been scrapped. Foreign companies are hitherto required to bring in export earnings in the same proportion to that of foreign exchange outgo by way of dividend.

The relaxation of the guidelines in e-commerce was restricted to B2B ventures, and even here the overseas promoters holding up to 100 per cent in such ventures will have to divest 26 per cent stake in favour of the Indian public within a period of 5 years.

Commenting on the new norms, Mr. Pramod Mahajan, parliamentary affairs minister , said that liberalising FDI was a better option in many sectors than bearing the burden of a higher import bill. He also stated that FDI created infrastructure and generated jobs within the country.

The restriction has been done away with in 22 specified sectors including white goods, entertainment electronics, cigarettes, tea, coffee, sugar, salt, oil, soft drinks, leather and footwear.
Back to News Review index page