“FDI is an additionality of resource. This needs to be supplemented”, finance minister Arun Jaitley told a late-evening media conference. There is no finishing line. The multi-brand sector was opened to FDI in 2012 but the limit remains at 51 per cent. SBRT will now also be allowed to do e-commerce.
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While the government has chose to allowed 49 per cent FDI in Defence sector made through automatic route, it has also allowed 100 per cent FDI in non-news channels through the same.
In defence, while FDI limits has been kept at 49 per cent, foreign institutional investors and foreign venture capital investors will be allowed to take up the entire chunk.
For foreign investments in private banks, the government has allowed so-called full fungibility.
Karunanidhi recalled that he had earlier opposed the BJP government’s decision to increase FDI cap in insurance sector, saying he had then pointed out that BJP, while in opposition, had opposed it. However, it permitted FDI up to 49% through the automatic route, following which it will require government approval.
This is the second time the FIPB monetary limit has been raised in a year. That is higher than the previous cap of Rs.3,000 crore. “To provide opportunity to such single-brand entities, it has been decided that in case of state-of-art and cutting-edge technology areas, sourcing norms can be relaxed subject to government approval”, the DIPP said. Apart from the monies, the foreign investors will also get in best worldwide practices and also new ideas and different formats that we can experiment with.
In construction, for instance, the area restriction of floor area of 20,000 sq. metres in development projects and minimum capitalisation of $5 million to be brought in within the period of six months of the commencement of business, has been scrapped. According to the official, the move will certainly encourage foreign companies to invest in India. However, the lock-in period condition will not apply to hotels, hospitals, special economic zones, educational institutions, and investment by non-resident Indians. The report also presents a detailed overview of FDI inflows and projects, covering sectors, emerging FDI destinations and countries of origin. Now development of townships, construction of residential and commercial premises have been brought out of it. Earning of rent or income of lease of property would not be classified as real estate business. Further Indian brands should be owned and controlled by resident Indian citizens and/or companies, which are owned and controlled by resident Indian citizens.
Prominent Indian companies investing in the United Kingdom include Tata Motors, Essar Energy, TVS Group, Tata Consultancy Services (TCS) and Indian banks.
Prime Minister Narendra Modi has said that India will no longer resort to retrospective taxation, while acknowledging that such steps were adversely affecting the mood of existing and potential investors.
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A spokesman contacted by AFP said details of the new FDI limits for specific sectors were not immediately available, although he said further details would be announced later in the day. In the non-news category, now FDI up to 100% has been allowed without the government’s approval. Interestingly, FDI via the automatic route, which was applicable only to tea plantations, has been extended to five items – rubber, coffee, cardamom, olive and palm oil.
