Good news for investors! New and simpler FDI reforms are coming in defence, telecom and broadcasting

The Indian Government is going to make further changes in its FDI policies, eliminating the need for approvals in sectors where licences are also required.

These sectors include defence, telecom and broadcasting.

"Clearance for FDI (foreign direct investment) separately after securing a licence adds another layer of approval from same authorities," a senior government official told ET, adding “anyone who has gone through one level of scrutiny for licence from the authorities concerned should not need to go through the same checks again."

Presently, investors have to apply for licences in several sectors, get clearances from multiple ministries, apply for approval of foreign investment.

"Why should there be a need for another level of clearance from same authorities?" the official cited above told ET.

The government is looking to give a push to domestic manufacturing of defence equipment to reduce imports and also create more local jobs. Since 2000, the defence sector has attracted just over $5 million in FDI.

In the case of telecom too, 100% FDI is allowed but subject to licensing by the Department of Telecommunications. Similarly, broadcasting is subject to rules and conditions framed by the ministry of information and broadcasting.

"Abolition of FIPB will be truly be impactful if government approval is done away with in FDI policy across sectors. If a licensor would grant FDI approval under licensing requirement but RBI would eventually be monitoring the compliance of same under FEMA (Foreign Exchange Management Act), it would need some consistency and connecting of dots," Akash Gupt, partner, PwC, told ET.