Published: Thu, January 11, 2018
Markets | By Noel Gibbs

Modi Government Eases FDI Norms in Key Sectors Including Retail, Civil Aviation

Modi Government Eases FDI Norms in Key Sectors Including Retail, Civil Aviation

Government has put in place an investor friendly policy on FDI, under which FDI up to 100 per cent, is permitted on the automatic route in most sectors/ activities.

"At the same time, it is important that the government ensures that airlines in India have the most conducive operating and regulatory environment to compete effectively", Albert Tjoeng, Assistant Director of Corporate Communications, (Asia Pacific) at IATA, said in a statement.

The Cabinet also clarified that "real-estate broking service does not amount to real estate business and is therefore, eligible for 100 per cent FDI under automatic route".

On allowing 100 per cent FDI through the automatic route in single-brand retails, it said that the move reflected on the Modi government's intentions of "moving towards allowing FDI in multi-brand retail trade".

Existing rules allow foreign airlines to own as much as 49% in private Indian airlines, but not in Air India.

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For the first five years of launching operations in the country, entities no longer require to source 30% good from India; earlier, this was mandatory.

"Having taken the decision to privatise Air India, the Modi government is now moving towards handing over Air India to a foreign airline".

"Whether it also allows foreign carriers (to invest), which presumably is the case, then it raises some fundamental questions", Sharma said.

In the recent past, the Government has brought FDI policy reforms in a number of sectors viz.

Surviving on taxpayers' money, Air India is estimated to have a debt burden of more than Rs 50,000 crore.

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"It has now been made a decision to permit 100 per cent FDI under automatic route". So far, such investors were restricted only to investments in the secondary market.

Commerce and Industry Minister Suresh Prabhu said the decisions would help "remove roadblocks" for receiving foreign investments and expressed the hope that relaxation of norms would facilitate faster development of the economy.

For this objective, it said, incremental sourcing would mean the increase in terms of value of such global sourcing from India for that single brand (in Indian rupee terms) in a particular financial year over the preceding financial year, by the non-resident entities undertaking single brand retail trading entity, either directly or through their group companies. After the amendments, no government approval is required for 100 per cent investment.

Expressing similar views, Wildcraft co–founder Siddharth Sood said: "The consumer in the country will be direct beneficiary of this move as they will have access to the brands hitherto unavailable in the country as it will be much easier for the global brands to set up shop in India". "This will liberalise and simplify the FDI policy and provide ease of doing business in the country.#ReformsInFDIpolicy #FDIpolicyForNewIndia".

Measures undertaken by the Government have resulted in increased FDI inflows in to the country.

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This is unedited, unformatted feed from the Press Trust of India wire.

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