Govt Eases FDI Rules

Government liberalized foreign direct investment (FDI) norms in 15 major sectors of the economy to further boost the investment environment and to bring in more foreign investment in the country.

These sectors include mining, civil aviation, defence, broadcasting, construction, manufacturing and private sector banking.

That effectively means that the FDI in these sectors will be easier and more welcome than before.

Following changes were announced:

  • 100% FDI under automatic route is permitted in construction sector for operation and management.
  • FPI’s have been allowed to invest upto 74 %in private banks.
  • 100% FDI is allowed in plantation of rubber, coffee, cardamom, palm oil tree and olive oil tree.
  • 100 % FDI has been allowed in DTH, CABLE Network and Mobile TV and 49 % FDI has been approved in FM radio.
  • 100% Automatic route FDI allowed in Up-linking of Non-‘News & Current Affairs’ TV Channels.
  • In order to relax FDI policy in single-brand retail, government has allowed companies to sell products through e-commerce.
  • Government has allowed foreign investment up to 49% under automatic route in regional air services sector.
  • FDI policy on Limited Liability Partnerships (LLP) has been amended to provide that investments in LLPs will not require Government approval.
  • The government has also proposed to increase FIPB limit to Rs 5,000 crore from current Rs 3,000 crore.

Opening up new sectors for foreign players is part of the ambitious ‘Make in India’ initiative of the government. FDI is also essential to implement the ‘ease of doing business’ in the country.

This year, India was rated ahead of China and the US as the world’s number one destination for foreign direct investment.

What’s more the big ticket FDI reforms come just before Prime Minister Narendra Modi sets out on his UK and G20 visit.

Today, India is the fastest growing economy among major Nations. The World Bank has improved India’s ranking by 12 places in the 2016 Study of Ease of Doing Business. FDI has gone up by 40%.

Several Global Institutions have projected India as the leading destination for FDI in the World. IMF has branded India as the brightest spot in the Global Economy whereas the World Bank projects India’s growth at 7.5% and even better.