Cabinet approves 100% FDI in retail, construction

Ross Houston
January 10, 2018

The present FDI policy on single brand retail trading allows only 49% FDI under automatic route and FDI beyond 49% and up to 100% through government approval route. "This will liberalise and simplify the FDI policy and provide ease of doing business in the country.#ReformsInFDIpolicy #FDIpolicyForNewIndia".

Foreign airlines were so far barred from owning any share in Air India, even though they were allowed to have up to 49 percent stake in other Indian airline companies.

"It has now been decided that for investments in automatic route sectors, requiring approval only on the matter of investment being from country of concern, FDI applications would be processed by Department of Industrial Policy and Promotion (DIPP) for government approval".

Now, foreign airlines have been allowed to have up to 49% stake under the approval route in Air India subject to certain conditions, an official release said.

Currently, FDI of up to 49% is permitted under automatic route in single-brand retail but beyond that limit, a government nod is required.

He added that although India's organized retail sector is in a nascent stage, it has today become a potential target for FDI from across the world.

The cabinet also eased FDI rules for civil aviation, just days after the government said it will go ahead with the privatisation of the debt-ridden national carrier Air India.

The Cabinet also allowed foreign institutional and portfolio investors to invest in power exchanges and relaxed FDI policy for medical devices and audit firms associated with companies receiving overseas funds.

However, the government's decision to allow FDI in Air India was opposed by the Congress and the Left.

On allowing 100 per cent FDI through the automatic route in single brand retail, the CPI-M said the move portends the Modi government's intentions of "moving towards allowing FDI in multi-brand retail trade".

The CAIT also condemned the Modi government's "love for MNCs".

That was part of a series of moves to relax restrictions on foreign investment. During the year 2014-15, total FDI inflows received were $45.15 billion against $36.05 billion in 2013-14.

The changes in FDI policy are made to provide a more investor-friendly climate to foreign players and in turn attract more FDI to boost economic growth and create jobs.

During 2015-16, the country received total FDI of USA $ 55.46 billion. FDI during April-September this fiscal grew by 17 per cent to $25.35 billion.

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