What changed
The government liberalised FDI limits in petroleum product marketing, oil exploration (small/medium fields), and petroleum product pipelines to 100% under automatic route. In domestic airlines, FDI up to 100% is allowed for NRIs and up to 49% for others, with a ban on equity participation by foreign airlines.
What it means for you
Banks can now process higher FDI inflows in these sectors without prior RBI approval, reducing compliance burden. Lenders financing these sectors may see increased foreign investment, boosting project viability and credit demand. However, the ban on foreign airline equity in domestic airlines limits certain deal structures.
What you must do
- Update internal FDI processing guidelines to reflect 100% automatic route for petroleum marketing, exploration, and pipelines.
- Ensure NRI clients in domestic airlines can invest up to 100% under automatic route, while others are capped at 49%.
- Verify that no direct or indirect equity participation by foreign airlines is involved in domestic airline investments.
- Communicate these changes to your trade finance and forex advisory teams for customer guidance.
Who it affects
Authorised Dealer banks handling FDI remittances, Corporate clients in petroleum and airline sectors, NRI investors seeking automatic route investments
What is the FDI limit for domestic airlines under this circular?
NRIs can invest up to 100% under automatic route, while other investors are capped at 49%. Foreign airlines cannot hold any equity, directly or indirectly.
Does this circular require prior RBI approval for these investments?
No, the investments are under the automatic route, so banks can process them without prior RBI approval, subject to sectoral policies.
Which petroleum activities are covered under 100% FDI?
Petroleum product marketing, oil exploration in small and medium fields, and petroleum product pipelines are covered.