The ruling NDA government has unveiled sweeping liberalisation of foreign direct investment (FDI) norms just days after BJP’s debacle in Bihar. The government on Tuesday opened up and enlarged FDI in 15 sectors including real estate, defence, civil aviation and news broadcasting in a bid to push up reforms.
The government also raised financial power of the Foreign Investment Promotion Board (FIPB) to allow single window clearance for investment projects of up to Rs 5,000 crore from Rs 3,000 crore currently.
Prime Minister Narendra Modi described the easing of FDI norms in 32 investment points as reflection of “unequivocal and unwavering” commitment of the government to development and reforms as they should touch life of every citizen.
“Govt’s commitment to development and reforms is unequivocal and unwavering. Today’s reforms are another example of minimum government, maximum governance. They will ease, rationalise and simplify processes. Govt wants the world to see the tremendous opportunities India offers,” the PM said in the micro-blogging website Twitter.
He asserted that the country is “unstoppable” on the path of economic progress and the government wanted the world to see the tremendous opportunities India offers.
Restrictions in the construction sector were freed up by allowing overseas investors to exit and repatriate investment even before project completion.
FDI stakes has gone up to 49 per cent in defence firms from the earlier 24 per cent.
And regional airlines has been allowed without government nod.
The raft of reforms, aimed at boosting investor confidence and drumming up FDI for faster growth, comes ahead of Modi’s visit to the UK beginning November 12. The relaxations reinforce the government’s narrative on economic reforms and its intent to attract global investors and ease rules for them.
Talking to the Press, Finance Minister Arun Jaitley said: “Reform is always an ongoing process, there is no finishing line as far as reforms are concerned”.
When asked whether the FDI reforms would also include multi-brand retail, he said that there is no change in the existing policy for the sector.
As part of the reform exercise, the government has allowed 100 per cent FDI in cable and direct-to-home TV operators, duty free shops and investment through automatic route in limited liability partnerships.
It also permitted portfolio investors to buy up to 74 per cent in local private banks, with full fungibility. While, the new policy allowed 100 per cent FDI in five plantation crops — coffee, rubber, cardamom, palm oil and olive oil through the automatic route, a move hailed by the industry.
Rules for sourcing for single brand retailers particularly for high-tech have been eased by allowing them to sell online without specific permissions. But there is no change in 51 per cent limit for retailers like Wal-Mart in multi-brand retailing.
Notably, the new FDI policy was unveiled without even a Cabinet approval. The clearance would be taken ex post facto.