Budget 2019: Govt proposes opening up of FDI in Aviation, Media, Insurance

New Delhi, July 05: Finance Minister Nirmala Sitharaman presented the first Union Budget of the Narendra Modi 2.0 government. India is quite capable to achieve its goal of becoming $5 trillion economy in next few years, Sitharaman said adding that India has already become the sixth largest economy of the world.

The government on Friday proposed relaxation in the FDI norms for sectors such as media, aviation, insurance, and single brand retail with a view to attract more overseas investment.

Finance Minister Nirmala Sitharaman in his Budget speech said that India's FDI inflows in 2018-19 grew by 6 per cent to USD 64.37 billion.

"I propose to further consolidate, the gains in order to make India more attractive FDI destination. The government will examine suggestions of further opening up of FDI in aviation, media, AVGC (Animation, Visual effects, Gaming and Comics) and insurance sector in consultation with stakeholders," she said.

The minister said 100 per cent foreign direct investment (FDI) will be permitted for insurance intermediaries, and local sourcing norms will be eased for FDI in single brand retail sector.

Currently, as per the FDI policy, 49 per cent foreign investment is allowed in the insurance sector, which includes insurance broking, insurance companies, third party administrators, surveyors and loss assessors.

"Government will examine opening up FDI further in aviation, media. Local sourcing norms to be eased for single-brand retail FDI," said Nirmala Sitharaman.

The Finance Minister also announced 100 per cent FDI permitted for insurance intermediaries. Credit Guarantee Enhancement Corporation will be set up in 2019-20, action plan to deepen markets for long-term bonds with a specific focus on infra sector to be put in place.

The government is contemplating organising an annual investors global meet in India. Global investors meet using national investment fund to get industrialists, sovereign wealth funds and VC funds.

She also said,''To study opening up of FDI in several other sectors. Nod for 100 per cent FDI in insurance intermediaries. FDI in media and aviation to be liberalised.''

What is Foreign direct investment (FDI)?

Foreign direct investment (FDI) is a major monetary source for economic development in India.

Foreign companies invest directly in fast growing private Indian businesses to take benefits of cheaper wages and changing business environment of India.

Economic liberalisation started in India in wake of the 1991 economic crisis and since then FDI has steadily increased in India, which subsequently generated more than one crore jobs. According to the Financial Times, in 2015 India overtook China and the United States as the top destination for the Foreign Direct Investment. In first half of the 2015, India attracted investment of $31 billion compared to $28 billion and $27 billion of China and the US respectively.

The Government of India amended FDI policy to increase FDI inflow. In 2014, the government increased foreign investment upper limit from 26% to 49% in insurance sector. It also launched Make in India initiative in September 2014 under which FDI policy for 25 sectors was liberalised further. As of April 2015, FDI inflow in India increased by 48% since the launch of "Make in India" initiative.

India was ranking 15th in the world in 2013 in terms of FDI inflow, it rose up to 9th position in 2014, while in 2015 India became top destination for foreign direct investment.