Cabinet approves 100% FDI in single brand retail, construction

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The present FDI policy on single brand retail trading allows only 49% FDI under automatic route and FDI beyond 49% and up to 100% through government approval route.

So far, the government allowed Foreign Direct Investment in single brand retail up to 49% through the automatic route, but any investment above that limit required the government's approval. "It has now been made a decision to permit 100 percent FDI under automatic route", an official release said here, following a Cabinet meeting.

He added that although India's organized retail sector is in a nascent stage, it has today become a potential target for FDI from across the world. "It should be 100 per cent FDI in Air India".

The cabinet also approved Foreign Institutional Investors/foreign portfolio investors (FIIs/FPIs) to invest in Power Exchanges through primary market apart from approving definition of "medical devices" amended in the FDI Policy.

The Communist Party of India-Marxist (CPI-M) said the Modi government was now moving towards handing over Air India to a foreign airline.

The government also said that issue of shares against non-cash considerations like pre-incorporation expenses and import of machinery will now be permitted under the automatic route in case sectors do not require government nod.

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In another relaxation in the construction sector, 100% FDI was allowed through automatic route in townships, housing, built-up infrastructure and real-estate broking services. The new rules are expected to speed up clearances and investments.

The CAIT also condemned the Modi government's "love for MNCs".

That was part of a series of moves to relax restrictions on foreign investment. It has been chose to provide in the FDI policy that wherever the foreign investor wishes to specify a particular auditor/audit firm having global network for the Indian investee company, then audit of such investee companies should be carried out as joint audit wherein one of the auditors should not be part of the same network.

The government has claimed that after the initial move FDI inflows increased substantially.

Industry players welcomed the development saying it would help attract more foreign investments in the sector and boost the economy and generate employment. During 2015-16, country received total FDI of United States $ 55.46 billion.

FDI flow into India during the April-September period grew by 17% to $25.35 billion. Accordingly, the government has chose to introduce a number of amendments in the FDI policy.

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