Agriculture sectors such as horticulture, floriculture, development of seeds, animal husbandry, pisciculture, aqua culture, cultivation of vegetables and mushroom, and services related to agro and allied sectors are now open to 100% foreign direct investment (FDI) through the automatic route, reports the Business Standard.

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 official said.

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

"Besides this, FDI is not allowed in any other agriculture sector or activity," the official said.