Foreign Direct Investment (FDI) has been further liberalized in key sectors including Single Brand Retail Trading (SBRT) and Construction Development, as the Union Cabinet chaired by the Prime Minister Shri Narendra Modi on Wednesday January 10, 2018 approved amendments intended to liberalise and simplify the FDI policy so as to provide ease of doing business in the country. It has been felt that the country has potential to attract far more foreign investment which can be achieved by further liberalizing and simplifying the FDI regime. In turn, it will lead to larger FDI inflows contributing to growth of investment, income and employment.
SBRT entity has also been permitted to set off its incremental sourcing of goods from India for global operations during initial 5 years, beginning 1stApril of the year of the opening of first store against the mandatory sourcing requirement of 30% of purchases from India. After completion of this 5 year period, the SBRT entity shall be required to meet the 30% sourcing norms directly towards its India’s operation, on an annual basis.
Earlier foreign airlines were allowed to invest under Government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49% of their paid-up capital. This provision was not applicable to Air India, thereby implying that foreign airlines could not invest in Air India.
Earlier the FDI policy did not have any provisions in respect of specification of auditors that can be appointed by the Indian investee companies receiving foreign investments
Foreign Direct Investment is a major driver of economic growth and a source of non-debt finance for the economic development of the country. Government has put in place an investor friendly policy on FDI, under which FDI up to 100%, is permitted on the automatic route in most sectors/ activities. Government in the recent past has brought FDI policy reforms in a number of sectors that include Defence, Insurance, Pension, Other Financial Services, Asset Reconstruction Companies, Broadcasting, Civil Aviation, Pharmaceuticals, and Trading etc.
Measures undertaken by the Government have resulted in increased FDI inflows in to the country. An all-time high FDI of US $ 60.08 billion has been received in the financial year 2016-17 and there has been incremental growth in FDI as compared to previous years as under:
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