Govt eases FDI norms for single brand retail, coal mining, digital media
New Delhi, Aug 28: In order to boost a sluggish economy, the Centre on Wednesday notified 100% Foreign Direct Investment (FDI) in contract manufacturing under the automatic route. A 26 per cent FDI was also approved in digital media.
Union Minister Piyush Goyal said that the Cabinet has relaxed rules for single-brand retail and expanded definition of 30 pc domestic sourcing. Besides, the Cabinet approved online retailing under single-brand retail and relaxed rule of a mandatory brick-and-mortar store.
"FDI regulations have been liberalised. FDI regime has been simplified. This will also boost employment for the youth. We see an opportunity to make India a manufacturing hub," Goel, said after a cabinet meeting.
Earlier, Union Finance Minister Nirmala Sitharaman had proposed 100% FDI for insurance intermediaries. Prior to this, the FDI limit was set at 49%.
In the existing foreign investment policy, 100 per cent FDI is permitted in the manufacturing sector under the automatic route.
Key points on FDI relaxation
- On FDI in single brand retailing, the Cabinet has expanded the definition of mandatory 30 per cent domestic sourcing norm.
- Companies can now start online retailing before establishing a physical store and there will be 26 per cent FDI in digital media.
- Local sourcing will be not be year-on-year, but instead on block of five years.
- Exports will also be included in the 30 per cent that the foreign investor will have to source locally. 30 per cent local sourcing norm in retail eased.
- FDI norms for contract manufacturing sector has also been relaxed as the government allowed 100 per cent FDI via automatic route in the sector.
- There will be 100 per cent FDI in coal mining and associated infrastructure through an automatic route.
- Railways and Commerce Minister Piyush Goyal said there was the largest FDI inflow last financial year. There has been $286 billion FDI since 2014-15.
- To ensure increased investments. He ensured a steady flow of FDI even when it slows down across the world.
- Government sees an opportunity to make India a manufacturing hub which will boost employment. He said FDI regulations have been liberalised and simplified.
On Friday, Sitharaman had announced tax incentives and some reforms across a variety of sectors in an effort to stimulate slowing economic growth. After rapidly expanding in last couple of years, India's economic growth momentum has been slipping since the last 3-4 quarters.
Not only did GDP growth fall to a 20-quarter low of 5.8 per cent in January-March, telltale signs of distress are visible in sectors like NBFCs, automobile, real estate, and FMCG.
To pull out the economy from the current slump, the finance minister provided tax relief for foreign portfolio investors (FPIs) and startups coupled with targeted steps for the automobile sector and upfront support of Rs 70,000 crore to public sector banks with an aim to revive demand conditions.
Union Cabinet on Wednesday approved 75 new medical colleges to be established by 2021-22. He said this move to add 15,700 MBBS seats in the country.
Besides this, the Union Cabinet also approved sugar export policy for the evacuation of surplus stocks during sugar season 2019-20. Export subsidy of Rs 6268 crore will be given to sugarcane farmers for producing 60 lakh tonnes of sugar.
The cabinet has also establishment of an International Coalition for Disaster Resilient Infrastructure (CDRI), said Javadekar adding that the prime minister will launch CDRI during UN Climate Summit in New York on 23rd September 2019.