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What is 'Sectoral Cap' under FDI Policy? Meaning Explained

Caps on Investments

Non-residents can make investments in the share capital of a resident entity in India.

But the investments can be done only to the extent permissible under FDI policy.

In some sectors, the permissible limit is to the extent of 100% of the total capital and in other sectors it is less than 100%.

In some sectors, FDI is prohibited totally.

Sectoral Cap Meaning

Sectoral cap, in short, means 'statutory ceiling'.

Sectoral cap is the max. amount of capital which investors from outside India can invest in Indian entity(ies).

Sectoral cap is considered as a composite cap. Here, foreign investments can be by both direct and indirect mediums viz. Foreign Direct Investment (FDI), Foreign Institutional Investor (FII), Depository Receipt (DR), Foreign Capital Venture Investor (FVCI), Non-resident Indian (NRI), Foreign portfolio investment (FPI), Investment Vehicle, etc.

Some of the instruments issued being in the nature of debt are not considered as foreign investment.


Example:


Foreign Direct Investment in Airports


Further, refer the Consolidated FDI Policy Circulars and Press Notes as released by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry, Govt of India.

Comments

  1. Thanks a lot.. Can you please explain these sectorial cap is for fdi only or total foreign investment.

    ReplyDelete
    Replies
    1. Sectoral Cap is for FDI only, but for External commecial borroowings

      (debt ) also there are seperate limits

      Delete

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