ibusinesslines.com March 23, 2018

FDI policy liberalised; fgn airlines allowed 49% stake in AI

13 January 2018, 03:57 | Kelvin Horton

FDI policy liberalised, 100% FDI now in retail, construction

Foreign Investment

Wednesday's cabinet decisions came before the prime minister was to leave for the World Economic Forum meeting in Davos, Switzerland where Modi is expected to tout India as an attractive investment destination.

Until now, FDI of up to 49 per cent was permitted in both sectors, but beyond 49 per cent, government approval was required. The Cabinet has allowed 100% FDI via automatic route in single brand retail trading and construction, while it has raised the existing limit in power exchanges and aviation sectors. Similarly, with the government relaxing norms for Air India, foreign airlines can now invest up to 49% under approval route in the sale-bound Indian carrier. Senior Congress leader Anand Sharma said that 100 per cent FDI in single brand retail was notified during the previous UPA government and the only change made is to allow it through the automatic route. It has said that allowing 49% foreign investment is not the best of the solutions for ending the troubles with the National Carrier.

This is the second major liberalisation in FDI policy by the NDA government in one go after major changes effected in June 2016.

Besides, the clarification that real estate broking service will not amount to real estate business has addressed the issue being faced by such firms.

India has secured robust foreign investment inflows in recent years, but its economic growth has slowed recently. However, foreign investors' purchases were restricted to the secondary market only.

"(The) Swadeshi Jagran Manch strongly opposes the decisions of the Union cabinet allowing 100 per cent FDI under automatic route for single-brand retail and construction development.

"Global brands across different categories, from apparel to electronics to accessories will be aided through this, providing further options to Indian consumers and improving India?s ranking in ease of doing business", he added.

However, he said, it was expected that the government's liberalisation of FDI norms for multi-brand retail would enable large worldwide retail chains to invest in the country and bring latest technologies and retail formats into India.

This is published unedited from the PTI feed.

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