The new Finance Minister has said that the Ministry is working on a policy document for further liberalisation of the foreign investment policy. The key amendments we can expect out of this policy change are likely to be:
1. Composite cap for all types of investments including FDI, FII, NRI and others.
2. Opening up most sectors like railways, ecommerce etc (other than strategic sectors) to foreign investment upto 49% under the automatic route. Defence could benefit too.
3. Categorisation of sectors based on National Industrial Code to ensure clarity.
On 14 August, RBI tightened capital flows outside India by residents by slashing the per FY LRS limit of USD 200,000 to USD 75,000 (further prohibiting use of LRS for buying immovable property abroad) and limiting overseas foreign direct investment by an Indian party to 100% of its net worth from the current 400% limit.
On 16 July 2013, the Government of India raised caps in foreign direct investment into as many as nine sectors in the pursuit to attract greater capital inflows and stem the fall in rupee. A summary of the announcement has been discussed briefly here.