According to the notification, the RBI will give approval for a) foreign investment upto 51 per cent of the equity capital in high priority industries, b) foreign technology agreements in high priority industries, c) foreign technology agreements in industries other than "high priority", d) dividend remittance, e) hiring of foreign technicians, and f) foreign investment upto 51 per cent equity in trading companies. High priority industries imply those included in annexure III of the new industrial policy.
Though the RBI notification makes it clear that automatically is not really automatic, there are a few positive measures spelt out in the release. For areas not coming under high priority companies can make payments in Exim scripts provided no free flow of foreign exchange is involved. Also, authorised dealers are being delegated powers by the RBI to make remittances of technical knowhow fees and royalty on production of collaboration approval letters.
Another significant measure is the 'automatic' approval for 51 per cent foreign equity participation in trading companies 'primarily engaged in export activities'. The RBI intends to issue a separate press note shortly indicating the criteria for decoding whether an Indian company can be said to be primarily engaged in export activities.