Govt raises FDI cap in news channels to 49 percent

However, the government denied that there was a link between the two.

“FDI is an additionality of resource”.

Union Finance Minister Arun Jaitley said that the country needs infrastructure for new ventures and FDI “is an additionality to it”. There is no finishing line.

In another big move it has made a decision to relax local sourcing norms for FDI in retail and said that in case of “state-of-art” and “cutting edge technology” sourcing norms can be relaxed subject to government approval. At present, the FII limit in defence production has been capped at 24 per cent. Under the earlier rules, FDI up to 49 per cent in defence sector was under the approval route and the cabinet committee on security had to clear foreign investments beyond that. However, it has been raised marginally to 49 per cent for news and current affairs channels, though the government route.

Opening up the manufacturing sector for wholesale, retail and e-Commerce is aimed at ensuring that the industries are motivated to “Make in India” and sell it to the customers here instead of importing from other countries. This means that foreign institutional investors or foreign portfolio investors or qualified foreign investors can invest up to the sectoral cap of 74%, provided that there is no change in management and control.

It will also lift the caps on investing in certain sectors including broadcasting and air transport and will increase the use of “automatic” routes for gaining investment approval in others.

The government increased the financial powers of the Foreign Investment Promotion Board (FIPB) to approve investment proposals worth Rs 5,000 crores from the present limit of Rs 3,000 crores.

The scheme, announced as part of simplified Foreign Direct Investment rules, provides for rewards to all Service providers of notified services, who are providing services from India, regardless of the constitution or profile of the service provider. Apart from the monies, the foreign investors will also get in best global practices and also new ideas and different formats that we can experiment with. The floor-area restriction of 20,000 square metres in construction projects and the minimum capital requirement of $5 million have been scrapped.

However, removing the lock-in-period stipulation in a few sectors, special economic zones and investments by NRIs could lead to speculation. The government has allowed 100% FDI in completed construction projects. Further, each phase of the construction development project would be considered a separate project for the purposes of FDI policy.

The survey includes the views of more than 500 decision-makers from multinational organizations across sectors, including over 50 business leaders from UK-based companies.

Will the new reforms further boost FDI flows into India?