Portfolio investors can invest up to 49% in retail, e-commerce

NEW DELHI: With the introduction of composite cap in foreign investment policy, portfolio investors can invest up to 49 per cent in multi-brand retail and online wholesale companies without government approval, an official said.

Although the ruling BJP is against opening of multi-brand retail to FDI, introduction of composite cap has opened the gates for portfolio investors ( FIIs, FPIs and QFIs) to pick up to 49 per cent in the politically sensitive sector without the government's nod.

At present, 51 per cent foreign direct investment is permitted in the multi-brand retail sector.

Similarly, FIIs, depository receipts (DRs) and FVCI (foreign venture capital investors) can invest up to 49 per cent in online wholesale (rpt) online wholesale sector without government's approval.

However, investors will require FIPB's (foreign investment promotion board) approval for investing beyond 49 per cent in a company, the official said.

India allows 100 per cent FDI in business-to-business (B2B) e-commerce through automatic route, but not in B2C companies selling directly to consumers.

Government is currently engaged with all stakeholders, including state governments, banks and industry, for preparing a detailed clarification on e-commerce sector.

Promising a simpler foreign investment regime, the government has introduced a concept of composite cap for all kinds of overseas inflows, including through FDI, FII and NRI routes.

It would help remove ambiguity on application of sectoral caps, conditions and approval requirements in different sectors and simplify the foreign investment policy.