India Eases Foreign Investment Rules To Push Growth

Single-brand retail

FDI policy liberalised, 100% FDI now in retail, construction

Regarding the liberalisation in the construction development segment, the government has made a decision to clarify 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 development is expected to clear the way for foreign airlines and Indian carriers to get into tie-ups to jointly invest in Air India. These are meant to liberalize and simplify the FDI policy so as to provide ease of doing business in the country.

The decisions came ahead of Modis participation in World Economic Forum at Davos this month where he is likely to hard sell India as an attractive investment destination.

"Allowing 100 per cent FDI in single-brand retail trade will further increase the hardship of traditional retail trade sector which is the second biggest livelihood giver after agriculture and expedite the ruin of the traditional retail trade sector", Sen said.

The Union Cabinet has given its approval to a number of amendments in the FDI Policy. This brings Air India, which previously had to be fully locally owned, in line with the country's other local airlines in which foreign investment is allowed.

As some critics have pointed out, the automatic approval of 100% FDI in single-brand retail comes with new caveats to replace existing ones and which will not be easy to meet for most companies.

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In construction sector, the Government clarified that real-estate broking service eligible for 100% FDI under automatic route.

"(The) Swadeshi Jagran Manch strongly opposes the decisions of the Union cabinet allowing 100 per cent FDI under automatic route for single-brand retail and construction development.

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

It is obvious that it is the slowing of the economy, post-demonetisation, that has prompted the government to accelerate the process of divestment and liberalise FDI norms on a large scale.

This is unedited, unformatted feed from the Press Trust of India wire.

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