India Eases Foreign Investment Rules To Push Growth

Single-brand retail

Modi Eases Rules for Foreign Investors as India Growth Slows

"A cabinet meeting, chaired by Prime Minister Narendra Modi, gave investors the go-ahead to invest 100 per cent in single-brand retail and other sectors without government's approval, " Government Spokesman, Frank Noronha, said.

With more investments, more jobs and income for the nation is expected, and the 49% on Air India came at the wake of government's decision to disinvestment on the carrier. It is therefore, eligible for 100 per cent FDI under the automatic route.

The RSS-affiliated Swadeshi Jagaran Manch on Thursday strongly opposed the Centre's decision to allow 100 percent FDI under automatic route for single brand retail and foreign investment up to 49 percent in Air India, saying these decisions are not in "interest of the country".

The amendments are meant to liberalise and simplify the FDI policy so as to provide ease of doing business.

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".

While India has seen its economy slowing recently, it has managed to secure a lot of foreign capital even without the new opportunities in place for entrepreneurs from overseas.

However, FII/FPI (foreign portfolio investors) purchases were restricted to secondary market only.

The Union Cabinet has given its approval to a number of amendments in the FDI Policy.

Allowing incremental sourcing undertaken by overseas companies to be counted towards the 30% sourcing commitment for the initial five years will provide them with the flexibility and time to align their retail and sourcing business in India. "We believe the decision to allow 100 per cent FDI through automatic route will ease the process for foreign as well domestic brands", Retailers Association said.

The National Democratic Alliance (NDA) has amended foreign direct investment (FDI) rules for the fourth time in three years to liberalize the investment regime for single-brand retail, real estate brokerage, aviation and power exchanges.

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