What to expect from PM Modi’s FDI policy review today
NEW DELHI: Prime Minister Narendra Modi will review the foreign direct investment (FDI) policy Friday. Finance Minister Arun Jaitley, Minister of Trade and Industry Nirmala Sitharaman, CEO of Niti Aayog, Amitabh Kant, and Secretary of the Department of Industrial Policy and Promotion (DIPP), Ramesh Abhishek, is expected to attend the meeting.
The DIPP, which is now the nodal ministry for all FDI approval proposals underway after the abolition of the Foreign Investment Promotion Board (FIPB).
At the meeting, the Ministry of Trade and Industry will make a detailed presentation of the proposed changes to expedite the FDI regime in the country, he told PTI. The outcome of the meeting is of importance, as it could lead to a relief from bottlenecks to allow foreign entrants.
Analysts believe that the economic reforms undertaken by the government led by Narendra Modi caused a feeling of optimism and the situation is needed to attract investors.
FDI standards in various sectors, including retail and construction, should be relaxed. Also on the table is the proposal to flexibilize the rules for the written press, the construction of the single brand and retail multi-brand.
In an important expected adjustment in the construction sector, an Indian company could be allowed to introduce FDI even for undeveloped plots in any project. Under current policy, 100% FDI is allowed in the construction sector, subject to several conditions.
Under the rules, the Indian investee is authorized to sell single developed parcels, which means that parcels in which public road infrastructure – roads, water supply, public lighting, drainage and sanitation – has been made available .
The government also weighs the option of allowing foreign retailers to open stores to sell “Made in India” products. Although the current FDI policy allows foreign players to hold 51% of a stake in an Indian retail company, the BJP in its electoral program opposes foreign investment in the retail space in detail.
There are also plans to allow 100 percent foreign investment. 100 automatic route in the retail trade of a single brand to attract a greater number of global players in the sector. At present, FDI up to 49% is allowed by the automatic route, but beyond this limit, the sign of the head of government is needed.
DIPP allowed last week to apply Amazon to enter the food retail sector in India, which has allowed the US-based e-commerce giant, the first foreign entity to enter the sector since its liberalization.
The Union Food Processing Minister, Harsimrat Kaur Badal, launched to allow foreign players to sell non-food products and processed foods and manufactured in India under FDI in food policy.