PM says FDI decision shows ‘unwavering’ commitment to reforms

Modi described the easing of FDI norms in 32 investment points, as a reflection of the “unequivocal and unwavering” commitment of the government towards development and reforms, as the latter should touch the life of every citizen. But PM Modi and his men should remember that while a favourable ranking in the World Bank’s Ease of Doing Business report would be useful in attracting foreign investment, but these rankings are not a reflection of the country’s business climate, security, corruption or financial stability.

“Liberalisation of FDI in important sectors like Defence, Manufacturing among others will bring in much – needed technology into the country which can then be leveraged to make India an exporting nation in the high-tech engineering industries”, said Chairman, EEPC, T. S. Bhasin. SBRT will now also be allowed to do e-commerce. Excise collections indicates manufacturing sector is moving up.

The ministry is also in the process of consolidating all FDI related instructions contained in various notifications and press notes for the convenience and clarity.

In a significant move to boost regional air connectivity, the government on Tuesday relaxed norms allowing up to 49 per cent foreign direct investment (FDI) through the automatic route in regional carriers. “Foreign companies will certainly come to invest, once this hurdle is removed”, he said.

To cap it all, the threshold up to which FIPB can consider foreign equity proposals has been raised from Rs.3,000 crore to Rs.5,000 crore. This will provision will cover DTH, mobile TV and cable networks. However, it has been raised marginally to 49 per cent for news and current affairs channels, though the government route. “With the announcement there will be consolidation in industry as existing global investors will buy out present shareholders”, India head of Centre for Asia-Pacific Aviation Kapil Kaul said.

But it stopped short of lifting curbs on multi-brand retailers, such as retail giant Wal-Mart, which to date has focused on its wholesale business in India.

For foreign companies in single brand retail that have an FDI of 100 per cent, conditions regarding sourcing from local markets have been eased. A senior Indian official said that the main aim of the government is to rationalise and simplify the entire FDI process. Currently, FDI up to 49 per cent is allowed but under the government approval route.

This is a very big newsto encourage and ease rules for the Foreign Direct Investments.

The Finance Minister further said that FDI inflows in last one year had increased by 40 per cent, adding that the foreign investment required for cycle of economic activity has to go on. The decision to allow foreign institutional investors, foreign portfolio investors and qualified foreign investors to independently or together own up to 74 per cent – the prescribed sectoral limit – in private banks, subject to management control remaining unchanged, will offer a few of them greater flexibility in expanding their capital base. The limit was the same earlier but the investor had to seek FIPB approval.