India Liberalizes FDI Policy Across Key Sectors
The Indian government has significantly eased foreign direct investment restrictions in sectors including defense, aviation, pharmaceuticals, and single-brand retail.
The Government of India has announced a significant wave of reforms to its foreign direct investment (FDI) policy, aiming to make the country a more attractive destination for international capital. The changes impact several key sectors, creating new opportunities for foreign investors. Under the new policy, 100% FDI is now more accessible in the defense sector, as the previous requirement for access to “state-of-the-art” technology for investments over 49% has been removed. The pharmaceutical sector will now permit up to 74% FDI through the automatic route, without prior government approval. Other major changes include allowing 100% FDI in scheduled airlines (though foreign airline ownership is capped at 49%), existing airport projects, and the trading of Indian-made food products. For single-brand retail, the government has relaxed local sourcing requirements for three years, with a possible five-year extension. These sweeping reforms are expected to stimulate economic growth and job creation, and counsel should advise clients to reassess their India investment strategies in response.