In a bid to the FDI structure, the government provided a composite foreign investment cap by clubbing all forms of overseas investments to define sectoral limits.  Finance Minister Arun Jaitley said that “from now onwards, all FIIs, NRIs and other foreign investments… Will be clubbed. It will be constituted as a composite cap”. Under the existing policy, there are different caps for separate investment categories like FDI, FII and NRIs.

The ministry has proposed a composite foreign investment cap (FDI + FPI (FII, QFI) + NRI + FVCI) in sectors, including agriculture, tea, mining, broadcasting, media, airports, retail (single brand and multi-brand), e-commerce, asset reconstruction companies, banking, commodity exchanges and insurance.

In 2014-15, investment by foreign institutional investors (FIIs) grew 717 per cent to USD 40.92 billion. FDI grew 27 per cent to USD 30.93 billion in the previous fiscal.

Advantage of the New Structure:

• The proposal is aimed at simplification of FDI policy with a view to attracting foreign investments and also improving ease of doing business in India.
• The proposal mooted by the Commerce and Industry Ministry would help remove ambiguity on application of sectoral caps, conditions and approval requirements in different sectors and simplify the foreign investment policy.