Farm sector open to 100% FDI, RBI clarified

Agriculture sectors such as horticulture, floriculture, development of seeds, animal husbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom under cultivated conditions and services related to agro and allied sectors are open to 100 per cent foreign direct investment (FDI) through the automatic route.

The matter has been clarified by the Department of Industrial Policy and Promotion (DIPP) after a query from the Reserve Bank of Bank (RBI) whether the government had allowed FDI in the agriculture and plantation sector.

"The latest booklet on FDI policy issued by the DIPP had removed agriculture and plantation from the restricted areas list. The sector is open to FDI only in a limited way. This was causing a confusion and the RBI had sought the clarification from the DIPP," a senior ministry official said.

The department has also clarified that FDI up to 100 per cent with prior approval of the government is permitted in the tea sector subject to the condition of disinvestment of 26 per cent equity of the company in favour of the Indian partners or parties within five years and prior approval of the state government concerned in case of any future land use changes.

'Besides this, FDI is not allowed in any other agriculture sector or activity,' the official said adding that the Press Note 4 also clearly list out the activities of real estate where FDI is permitted. Other than that, FDI is not permitted in any other real estate activity,' he added.