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Defence, aviation among many sectors opened to 100% FDI

By   /  June 20, 2016  /  Comments Off on Defence, aviation among many sectors opened to 100% FDI

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In the midst of the entire Rajan melee, the Union government took the radical decision and liberalized FDI regime, thus permitting foreign direct investment, albeit through government approval route many sectors including defence.

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This is the biggest reform since November 2015, and the commerce ministry issues a statement saying – With these changes India is now the most open economy in the world for FDI.

FDI is now permitted in civil aviation, animal husbandry, trading, e-commerce with respect to food products manufactured or produced in India. The defence sector is now completely open to FDI, yet conditional to some extent. To begin with it has to be through government approved route.

What may come across as a relief to Apple Inc, which had applied to exemption from 30 percent local sourcing norm, that the Finance ministry had earlier rejected; the government has decided to relax local sourcing norms up to three years and a relaxed sourcing regime for another five years for entities undertaking Single Brand Retail Trading of products having ‘state-of-the-art’ and ‘cutting edge’ technology.

The FDI policy on broadcasting carriage services will now enable 100 per cent FDI in teleports, DTH, Cable Networks, mobile TVs, and Headend-in-the Sky Broadcasting Service. As far as pharma sector is concerned it has been decided to permit up to 74 per cent FDI under the automatic route in brownfield pharmaceuticals and government approval route beyond 74 per cent will continue.

The prohibited list includes lottery, gambling, atomic energy, real estate and Real Estate Investments Trusts (REIT) and railway operations.

It cannot be completely written off that the timing of the announcement on FDI has been intentional to steer away the attention from Rajan’s exit from RBI; for, the opening up of markets to FDI is fraught with issues that are bound to be discussed in the coming days.

 

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