After Bihar Debacle, Govt Eases FDI in 15 Major Sectors

The government announced ‘big bang’ FDI reforms across 15 sectors including defence, broadcast and civil aviation.

Prime Minister Narendra Modi and Finance Minister Arun Jaitley. (Photo: Reuters)

The government today approved major reform in FDI norms across 15 major sectors “to boost the investment environment and to bring in foreign investments”.

According to an official statement, FDI reforms have been initiated in the following sectors:

• Limited Liability Partnerships, downstream investment and approval conditions
  
• Investment by companies owned and controlled by Non-Resident Indians (NRIs)
  
• Establishment and transfer of ownership and control of Indian companies
  
• Agriculture and Animal Husbandry Plantation
  
• Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities
  
• Defence
  
• Broadcasting Sector
  
• Civil Aviation
  
• Increase of sectoral cap
  
• Construction development sector
  
• Cash and Carry Wholesale Trading/Wholesale Trading (including sourcing from MSEs)
  
• Single Brand Retail Trading and Duty-free shops
  
• Banking-Private Sector
  
• Manufacturing Sector
  

The government has announced a 100 percent FDI in DTH, non-news channels, teleports, cable networks, duty-free shops located and operated in the customs bonded areas, plantation of rubber, coffee, cardamom, palm oil tree and olive oil tree.

FDI in news channels will be between 26 percent to 49 percent through the government route.

It has also relaxed the FDI policy in single-brand retail, allowing companies to sell products through e-commerce.

Regional air services are now allowed foreign investment up to 49 percent under the automatic route.

Department of Economic Affairs Secretary, Shaktikanta Das, mentioned that these relaxations in the FDI policy are a part of an exercise to promote ease of doing business.

Majority sectors have been put on the automatic clearance route. The aim, according to the government, is to improve ease of business.

The crux of these reforms is to further ease, rationalise and simplify the process of foreign investments in the country and to put more and more FDI proposals on automatic route instead of Government route where time and energy of the investors is wasted. It is one more proof of minimum government and maximum governance. Further refining of foreign investments in key sectors like construction where 50 million houses for poor are to be built. Opening up the manufacturing sector for wholesale, retail and e-commerce so that the industries are motivated to Make In India and sell it to the customers here instead of importing from other countries. The proposed reforms also enhance the limit of Foreign Investment Promotion Board (FIPB) from current rupees three thousand crores to five thousand crores. The proposal also contains many other long pending corrections including those being felt by the limited liability partnerships as well as NRI-owned companies who seem motivated to invest in India. A few other proposals seek to enhance the sectoral caps so that foreign investors don’t have to face fragmented ownership issues and get motivated to deploy their resources and technology with full force.

Government Statement

The government has raised the Foreign Investment Promotion Board (FIPB) approval limit as well – to Rs 5,000 crore from Rs 3,000 crore.

The Foreign Investment Promotion Board (FIPB) offers a single window clearance for applications on Foreign Direct Investment (FDI) in India that are under the approval route. The sectors under automatic route do not require any prior approval from FIPB and are subject to only sectoral laws.

<a href="http://fipb.gov.in/"> Foreign Investment Promotion Board, India</a>

Earlier, terming Prime Minister’s leadership as ‘strong, decisive and popular’, Finance Minister Arun Jaitley has said there was no question of any impact on ‘Brand Modi’ from the results of the Bihar polls.

His comments follow a spectacular victory for the Nitish Kumar-led Grand Alliance in the recently concluded Bihar assembly elections over the BJP-led NDA. The newly-formed JD(U)-RJD- Congress alliance secured 178 seats in the 243-member House while the NDA could get only 58 seats.

When asked whether there would be any impact of the Bihar results on ‘Brand Modi’, Jaitley said, “No. Nothing like that... brand is anyway a word coined by media. His leadership is strong, decisive and popular.”