The union cabinet has approved 100 percent FDI in single brand trading through automatic route. The meeting was headed by Prime Minister Modi, with a focus on reviewing foreign direct investment policy in certain sectors aiming to attract more overseas funds.
Besides relaxation of norms in single brand retail, the cabinet also allowed foreign airlines to invest up to 49 per cent in Air India.
As per the policy, foreign airlines are allowed to invest under government approval route in Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49 per cent of their paid-up capital.
However, the provision was not applicable to Air India, thereby implying that foreign airlines could not invest in Air India.
“It has now been decided to do away with this restriction and allow foreign airlines to invest up to 49 per cent under approval route in Air India,” it added.
The statement also said that foreign investment in Air India including that of foreign Airline (s) shall not exceed 49 per cent either directly or indirectly and “substantial ownership and effective control of Air India shall continue to be vested in Indian National”.
The government said that the decision would help provide ease of doing business and also lead to larger FDI inflows contributing to growth of investment, income and employment.
Further it has clarified that real-estate broking service does not amount to real estate business and is therefore, eligible for 100 per cent FDI under automatic route. The cabinet also decided to allow FIIs/FPIs to invest in power exchanges through primary market as well.
So far 49 per cent FDI was permitted under automatic route in power exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010. However, FII/FPI purchases were restricted to secondary market only.
Last year too, there was a proposal to permit 100 per cent FDI through automatic route in single brand retail trading. Currently FDI up to 49 per cent is permitted under the automatic route but beyond that limit government nod is required.
The relaxation of policy is aimed at providing investor friendly climate to foreign players and in turn attract more FDI to boost economic growth and create jobs. FDI during April-September this fiscal grew by 17 per cent to USD 25.35 billion.
Prime Minister Narendra Modi had underlined the boost in FDI in the last three years while addressing the PIO law makers’ conference on Tuesday in New Delhi.
(With inputs from PTI)