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No Changes in Foreign Investment Limits in India’s Banking and Defence Sectors

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Published on : Jul 21, 2015

The Indian government has clarified that the recent announcement on foreign investment norms for companies will not include the defence and banking sectors. As both these sectors are termed sensitive, the portfolio investment limits would be restricted at existing levels. Commerce Minister Nirmala Sitharaman confirmed that the restriction on investment limits has been put to stop unscrupulous practices. The portfolio investments in the banking sector would be limited to 49%. However, the foreign direct investment level can be raised to 74%. In defence sector, portfolio investment will be 24% and FDI limit can reach up to 100% depending on individual cases. The portfolio investments include QFIs, FPIs, and FIIs.

At an event organized by the Commerce Ministry, industry chamber FICCI, and the World Intellectual Property Organization, Sitharaman mentioned that in banking, the investment cap has been especially put on private banking. Last week, the government introduced investment caps on various foreign investments such as NRI, FII, and FDI to increase overseas inflows and improve the business environment in the country. She further added that the government’s initiatives include hiring more number of examiners to look into the pending patent applications as well as making majority of the application process online. The initiatives would be implemented after the new intellectual property rights policy is implemented to protect the Indian patents, copy rights, and geographical indications. To fast track the patent process, the government has already hired around 459 examiners. 

Sitharaman mentioned that the draft policy has been sent to all the ministries and after their consultations, it will be finalized by the Cabinet. So far, India’s poor IPR laws have restricted various international firms to particularly invest in solar and pharmaceutical sectors of the country.