Foreign Direct Investment Policy
India possesses great potential of mineral resources. However, there exists considerable scope for augmenting the resource position by further exploration of known deposits and discoveries of new deposits, adopting state-of-the-art technology and modern methods like aerial reconnaissance or geophysical surveys.
The geological and metallogenic history of India is similar to mineral rich Australia , South Africa , South America, and Antarctica , all of which formed a continuous landmass prior to the breaking up of Gondwanaland. It also has some features similar to the mineral rich Canadian shield of North America . Being aware of the vast potential of the sector, the Indian Government, has been consistently and in a pragmatic manner opening up the previously controlled regime to usher private investment in the sector and infuse funds, technology and managerial expertise. The opening up of the Indian mining sector has, therefore, generated considerable global interest. The Indian mining sector was opened up to Foreign Direct Investment in 1993 after the announcement of the New Mineral Policy. Initially, all proposals were considered on a case to case basis by the Foreign Investment Promotion Board (FIPB). FDI policy in the mining sector was further liberalised in January 1997 which opened up an “automatic approval” route for investments involving foreign equity participation upto 50% in mining projects, and upto 74% in services incidental to mining.
The Foreign Direct Investment (FDI) policy in the mining sector has been gradually liberalized over the last few years. FDI cap for exploration and mining of diamonds and precious stones have been increased to 100% under the automatic route with effect from 10th February, 2006.
With this, the Foreign Direct Investment in the mining sector for all non-atomic and non-fuel minerals have now been fully opened upto 100% through the automatic route including diamonds and precious stones.