Economy

FDI policy liberalised, 100% FDI now in retail, construction

FDI policy liberalised, 100% FDI now in retail, construction”

The Centre of Indian Trade Unions (CITU) on Thursday denounced the decision of the government to allow 49 per cent foreign direct investment (FDI) in Air India and said it was aimed at expediting the privatisation of the national carrier. These are meant to liberalise and simplify the FDI policy so as to provide ease of doing business in the country.

"It has now been made a decision to permit 100 per cent FDI under automatic route for SBRT (single brand retail trading)", the government said in a statement.

Overseas investment policy has also been liberalised in case of power exchanges, an online platform where electricity is traded.

"A cabinet meeting, chaired by Prime Minister Narendra Modi, gave investors the go-ahead to invest 100 per cent in single-brand retail and other sectors without government's approval, " Government Spokesman, Frank Noronha, said. "This would go against the interests of the domestic manufacturing and also would discourage the future investment in manufacturing in India and therefore would go against the own declared policy of the government of encouraging "Make in India", said Ashwani Mahajan, national co-convener, SJM.

"It has been chose 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. The change in FDI-in-retail policy isn't as contentious, but it is a fearless move because the RSS has always been opposed to it and the BJP's traditional voter base includes a lot of traders and retailers.

Commenting on the development, Commerce and Industry Minister Suresh Prabhu said the decisions would help "remove roadblocks" for receiving foreign investments. The amendment is likely to benefit companies such as Swedish furniture maker Ikea, which is planning to set up stores across the country.

The move should generate employment and give Indian consumers access to several global brands.

Both Mr Bhartia & Mr Khandelwal said that this decision is step towards allowing FDI in Multi Brand Retail. "This remains an unfinished agenda".

As part of changes in FDI norms in the SBRT, the government has also relaxed mandatory local sourcing requirement of 30 per cent, which has been a long standing demand from foreign brands.



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