Reply: Issue of India's accession to GPA is under examination. At present, a firm commitment on this issue is not feasible.
China 9:
Report by the Secretariat (WT/TPR/S/249): II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES: (4) Investment Regime: Paragraph 35:
"Since 1 April 2010, foreign direct investment (FDI) has been regulated by the Consolidated FDI Policy issued by the Department of Industrial Policy and Promotion (DIPP)."
"Sectors not listed in the Policy are 100% open to FDI under the automatic route subject to applicable laws, rules, and security conditions."
Question: Please explain whether this policy is a simple alternative or a major policy adjustment. Please explain what the automatic route is.
Reply: Government undertook a major exercise on consolidation of all existing regulations on FDI, with the aim of integration of prior regulations on FDI, contained in various sources, such as the Foreign Exchange Management Act (FEMA), Reserve Bank of India (RBI) circulars, various Press Notes etc., into one consolidated document, so as to reflect the current regulatory framework. The final document in this regard was released on 31 March 2010. Such consolidation is intended to ensure that all information on FDI policy is available at one place, which is expected to lead to simplification of the policy, as well as greater clarity and understanding of foreign investment rules among foreign investors and sectoral regulators.
Investments can be made by non residents through two routes: the automatic route and the government route. Under the automatic route, the non resident investor or the Indian company does not require prior approval of the Government of India, through the FIPB (Foreign Investment Promotion Board), for the investment. Under the government route, prior approval of the Government of India, through the FIPB, is required.
