Economy

Indian cabinet clears 100 pct FDI in single brand retail

Indian cabinet clears 100 pct FDI in single brand retail”

While foreign airlines were allowed to invest up to 49 per cent in the paid-up capital of Indian private airlines under the government approval route, this provision was not applicable to Air India.

The sale of Air India will be one of the key reforms in recent years as the airline is struggling with a debt load of US$7.6 billion (S$10.1 billion) and is surviving on a taxpayer bailout.

Now 100% FDI under automatic route for Single Brand Retail Trading and Construction Development will be allowed.

The Government, on the other hand, has pushed the proposal with a view to provide an investor-friendly climate to foreign players and in turn attract more FDI to boost economic growth, which it expects will create jobs. FIIs/FPIs will also be allowed to invest in Power Exchanges through primary market.

Rabindra Jhunjhunwala, partner, Khaitan & Co, said: "The approval through the automatic route will quicken the FDI clearance process as no prior government approval would be required". Foreign single-brand retail companies can set up operations without any time lag, thanks to the nod for 100% FDI under the automatic route.

"It has been made a decision to clarify that real-estate broking service does not amount to real estate business and is therefore, eligible for 100% FDI under automatic route", the statement said.

In a statement issued here on Thursday, CAIT National President BC Bhartia and Secretary General Praveen Khandelwal said that it will have vital bearing on livelihood of crores of small businesses in the country as the Government has taken the decision without considering its impact on India's existing retail trade.

"This should also generate employment and give the Indian consumers access to several worldwide brands", said Pinakiranjan Mishra, partner and national leader, consumer products and retail, EY.

However, the Government has clarified that "FDI in Air India including that of foreign Airlines should not exceed 49% either directly or indirectly and substantial ownership and effective control of the national carrier will continue to remain in Indian national".



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