DIPP notifies FDI relaxation in several sectors

DIPP notifies FDI relaxation in several sectors
27/01/2018 , by , in News/Views

The Department of Industrial Policy and Promotion (DIPP) today notified easing of FDI rules for several sectors, including single-brand retail and construction.

On January 10, in big bang reforms ahead of the BJP government’s last full Budget, the Union Cabinet had allowed 100 per cent foreign direct investment (FDI) in single-brand retail and construction development under the automatic route.Besides, foreign airlines were also allowed to buy up to 49 percent stake in Air India.

In its press note, the DIPP said allowing 100 per cent FDI in single-brand retail under the automatic route is aimed at attracting investments in production, marketing, improving the availability of products to consumers and encourage increased sourcing from India.

A foreign single-brand retailer would be permitted to set off its incremental sourcing of goods from India for global operations during initial five years, beginning April 1 of the year of the opening of the first store, against the mandatory sourcing requirement of 30 percent purchases from India, it said.Earlier also 100 per cent FDI was allowed in the segment, but it required government approval.

The DIPP also clarified that real estate broking service does not amount to real estate business thus addressing issues faced by such firms. It is, therefore, eligible for 100 per cent FDI under the automatic route.

The press note also said foreign investing companies registered as non-banking financial companies (NBFC) with the Reserve Bank, being overall regulated, would be under 100 percent automatic route. The DIPP also notified liberalisation of foreign investment in power exchanges, an online platform where electricity is traded.

Previously, the policy provided for 49 per cent FDI under automatic route in power exchanges. However, FII/FPI (foreign portfolio investors) purchases were restricted to secondary market only. Now, the restriction has been done away with, thereby allowing FIIs (foreign institutional investors/FPIs to invest in power exchanges through the primary market as well.



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