Union Government increased FDI Limit for FM radio from 20 per cent to 26 per cent

The Union government on 30 September 2011 increased the foreign direct investment limit for FM radio from 20 per cent to 26 per cent. The government also exempted the education sector and old-age homes from the conditions imposed in the construction sector.

The FDI limit in terrestrial broadcasting and FM radio was approved by the Cabinet in July 2011. TRAI in 2010 had made necessary recommendations arguing that increasing the limit will help the third-phase for FM radio, which will see 806 FM stations across 217 cities.

FDI into construction activities in the education sector and old-age homes has been exempted from the conditionalities imposed on FDI in the construction development sector. This would mean that schools, universities and colleges would not have to meet minimum area and built-up area requirement, minimum capital requirement, minimum capitalisation requirement and lock-in period. The Department of Industrial Policy and Promotion (DIPP) mentioned that the educational institute and old-age homes have their own special requirements which do not fit these conditionalities.

The government allowed overseas investment in bee-keeping and share-pledging for raising external debt. The FDI policy highlighted that liberalisation will bring in international best practices to upgrade the product in these sectors.

Research and development in biotechnology, pharmaceutical and life sciences sector would be covered under the industrial parks scheme, where 100 per cent FDI is permitted under automatic route.

The revised policy also allowed pledging of shares of an Indian company, which has raised ECBs, for securing the ECB raised. It also provides for opening and maintaining, without RBI approval, non-interest bearing rupee Escrow accounts by non-residents towards payment of share purchase consideration in a move to facilitate FDI. The circular also said that procedure for conversion of imported capital goods and machinery and pre-operative expenses into equity has been made easier.