For instance, Swedish company IKEA, which is setting up shop in Hyderabad, will be eligible to sell furniture to Indians through its e-commerce platform.

Similarly, Indian brands are equally eligible for undertaking single-brand retailing and certain extant conditions, including the one that mandates products to be sold under the same brand internationally, will not be made applicable. An Indian manufacturer is now permitted to sell its own branded products in any manner — wholesale, retail, including through e-commerce platforms.

Defence producers have got not only higher FPI and FVCI investment limits but also easier approvals. Tuesday’s policy review clarified that if bringing fresh investments results in ownership pattern or stake sale to a foreigner, government approval would be needed. Ownership change would invite issues of capital gains taxation. “At the moment, domestic defence production is not very significant. While large players are more in need of technology, smaller ones need both funds as well as technology. The revised FDI policy opens up the possibility of greater access to technology. The next reform needed for the growth of this sector is cleaning up the defence procurement procedure,” said Dhiraj Mathur, leader of defence and aerospace practice at PwC.

Private banks are now allowed to have FPI and FVCI investments up to the maximum foreign investment limit of 74%, up from the earlier 49%, provided there is no change in management or control of the investee company. “This will help the private banking sector immensely, especially at a time when India is emphasising on home-grown payment banks and wider penetration of banking services,” said Girish Vanvari, head of tax, KPMG in India.

Chanda Kochhar, MD & CEO, ICICI Bank, said, “The decision to remove the sub-limit restrictions within the overall limit of 74% for private sector banks will provide greater flexibility to banks and investors.”

The government also relaxed sectoral caps and entry routes in the broadcasting sector. FDI limit has been raised from 74% to 100% in teleports, DTH, cable networks, mobile TV, and head-end-in-the-sky broadcasting service (HITS). In these areas, FDI beyond 49% will require government approval. The FDI limit has been raised from 49% to 100% in local cable operators with government approval beyond 49% required. In FM radio and uplinking of news and current affairs TV channels, the FDI limit has been hiked from 26% to 49% under the government route. Also, FDI up to 100% has been allowed under the automatic route for uplinking of non-news and current affairs TV channels and downlinking of TV channels.

According to Anuj Puri, chairman and country head, JLL India, “The latest easing of foreign investment in construction will have a huge positive impact on the housing sector as a whole, but much more so on the affordable housing segment, which was so far not a beneficiary of FDI in any significant manner.”

The foreign investment for non-scheduled airlines and ground services, which is 74%, has been removed and these investments will be via the automatic route. Non-scheduled airlines refer to those that do not follow the timetable established by the civil aviation regulator (DGCA) and can be used for charter services. Nearly 130 non-scheduled operators (NSOP) are believed to be registered with the DGCA and a sizeable chunk is estimated to be used for charter services. Domestic airlines are allowed to use their own crew for ground handling services, but the foreign carriers are required to rope in third-party agencies for the same. The government has also said threshold limit for FIPB approval would be Rs 5,000 crore now, instead of Rs 3,000 crore earlier.

Jaitley said Tuesdays’ decisions have been approved by the PM, who has special authority of Cabinet. These will go for a post-facto approval of the Cabinet.

DIPP secretary Amitabh Kant said the reforms were an “integrated package for the progress of the country”, which were undertaken at the behest of Prime MinisterNarendra Modi. “This is a Diwali gift for investors. Everybody had been asking for big-bang reforms. Well, this is the biggest-bang reform ever in FDI policy… Overall, 32 changes have been made to the extant FDI policy,” he said.

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