This story is from June 20, 2016

Big reforms: Government introduces 100% FDI in defence, civil aviation

Big reforms: Govt introduces 100% FDI in defence, civil aviation
Key Highlights
  • Govt relaxes FDI norms, puts most sectors under automatic route.
  • FDI norms relaxed for defence, civil aviation, airports, pharmaceuticals and animal husbandry.
  • FDI is crucial for India, which needs around $1tn for to boost growth.
NEW DELHI: The government on Monday announced fresh liberalisation of FDI rules throwing open food retail, airlines and private security firms to higher overseas investment.
Other sectors in which FDI norms have been relaxed include e-commerce in food products, broadcasting carriage services, private security agencies and animal husbandry.
It also tweaked rules to allow companies such as Apple to open their own stores in the country by exempting them from local sourcing requirements for three years under the single brand retail segment for entities with cutting edge technology.

"Now most of the sectors would be under automatic approval route, except a small negative list. With these changes, India is now the most open economy in the world for FDI," said an official statement.
The decision to further liberalise FDI regime with the objective of "providing major impetus to employment and job creation in India" was taken at a meeting chaired by Prime Minister Narendra Modi today.
The decision comes two days after RBI governor Raghuram Rajan announced his decision to return to the Us on completion of his term in September. They were seen as a signal from the government that changes in the administrative set up are unlikely to impact its reform plans.

Although the finance ministry had kicked off discussions on easing FDI rules a few weeks ago, the decision was rushed through.
This is the second major reform in the FDI space. The Centre in last November had significantly relaxed the foreign investment regime.
Key changes include allowing 100% FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India and permitting up to 100 per cent FDI in defence sector. The other sectors that have benefitted include the broadcasting, pharmaceuticals, civil aviation, single brand retail among others.
The PM chose to ignore protests from food processing ministry on mandating sourcing norms for food retailers in a segment where 100% FDI has been permitted without riders.
The message was quite clear that India is open for business and the government will soon put in place a small negative list of sectors that require approval before investment by foreign players, DIPP secretary Ramesh Abhishek said.
In case of airlines, however, the government has chosen to restrict overseas carriers from holding beyond 49% while allowing 100% FDI.
In case of private security agencies the government has increased the cap to 74% from 49% but companies need to approval and follow the prescribed norms for the sector.
In a statement, DIPP also said that 74% FDI under automatic route would be allowed in brownfield pharma ventures instead of 49% earlier.
Here’s a look at the changes in FDI:
* Upto 100% FDI in defence sector
* Upto 74% FDI in brownfield pharmaceuticals under automatic route
* 100% FDI in brownfield airport projects under automatic route
* 100% FDI in civil aviation
* FDI upto 49% in civil aviation under automatic route, beyond 49% through govt approval
* Local sourcing norms for FDI in single brand retail for products having "state of art" and "cutting edge" technologies
* 100% FDI under automatic route for cable networks, DTH and mobile tv
Foreign investment is considered crucial for India, which needs around $1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth. A strong inflow of foreign investments will help improve the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar.
(With inputs from agencies)
Read this story in Marathi
End of Article
FOLLOW US ON SOCIAL MEDIA