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

Andrew Cummings
January 13, 2018

"The Union Cabinet, chaired by the Prime Minister Narendra Modi, has given its approval to a number of amendments in the FDI Policy".

Apple stores in India moved a step closer to reality with the government allowing 100 per cent foreign direct investment in single-brand retail through the automatic route and easing the 30-per-cent-domestic-sourcing norm.

By allowing 49% FDI in Air India, the government will likely get more bidders and hence a better valuation.

In a statement here, CAIT, said "100 per cent FDI in single brand retail through the automatic route will facilitate easy entry of MNCs in the retail trade and also violate the poll promise of the BJP".

"This breakthrough will open up millions of new employment opportunities, a push to investment activity in the economy and expansion in economic growth trajectory in the coming times", he said.

The cabinet has chose to permit foreign retailers setting up shop here to set off the goods sourced incrementally from India for their global operations during the initial five years against the mandatory sourcing requirement of 30 per cent of purchases from India.

This is the second time that the FDI policy has been changed by the current government.

Opening up of FDI for real estate brokers will surely help the sector in India.

The approval through automatic route is aimed at further quickening the FDI clearance process and many foreign players may now enter the Indian market this advantage of this. However, the government has yet to liberalise norms for multi-brand retail to enable large global retail chains to invest and bring latest technologies to India.

However, the Government has clarified that "FDI in Air India including that of foreign Airlines should not exceed 49% either directly or indirectly and substantial ownership and effective control of the national carrier will continue to remain in Indian national".

The easing of rules for Air India would allow foreign airlines to buy a minority stake in a carrier with a fleet of about 150 planes, and landing and parking slots at lucrative airports from London to NY.

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