Relaxation in Foreign Direct Investment (FDI) norms in various sectors:
Reforms announced on 28th August 2019
The Union Cabinet chaired by hon’ble Prime Minister, Narendra Modi, recently approval the proposal for review of FDI norms in certain sectors in order to boost economic growth. Reforms announced are:
- Coal mining sector: To attract international players to this sector, 100% FDI is now allowed in the sale of coal, for coal mining activities including associated processing infrastructure. Earlier, 100% FDI was allowed only for coal and lignite mining for captive consumption in power projects, iron and steel and cement unit as well as for setting up coal processing plants like washeries subject to certain conditions.
- Contract manufacturing: Though the existing Foreign Investment Policy allows 100% FDI in the manufacturing sector, the Policy did not specifically outline ‘contract manufacturing’. To give a boost to the manufacturing sector, the Government has allowed 100% FDI in contract manufacturing as well.
- Single Brand Retailing (SBR): Recognising the changing market practices, the Government has done away with the requirement that foreign owned SBR entities should operate through brick and mortar stores before venturing into e-commerce. As per the revised guidelines, retail trading through online trade can also be undertaken prior to opening of physical stores, subject to the condition that the entity opens physical stores within 2 years from date of start of online retail. Additionally, local sourcing norms have been further relaxed for SBR entities with an aim to attract large brands sourcing products from India.
- Digital media: FDI upto 26% is now permitted in digital media and current affairs media subject to prior approval of Government of India. Prior to this, FDI upto 49% (subject to prior approval) was only permitted in up-linking of ‘News & Current Affairs’ TV channels.
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