New Delhi, June 20: The NDA government has approved 100% Foreign Direct Investment in the aviation and the defence sector. A government release said that the Policy is being ‘radically liberalised’ with the aim of ‘providing major impetus to employment and job creation in India.’ The decision was taken at a high-level meet chaired by Prime Minister Narendra Modi on Monday. A commerce Ministry statement announced that the current FDI reforms make India ‘the most open economy in the world for FDI’.
‘This is the second major reform after the last radical changes announced in November 2015. Now most of the sectors would be under automatic approval route, except a small negative list. With these changes, India is now the most open economy in the world for FDI’, said the release on Monday. The meeting for reviewing the FDI was attended by representatives from NITI Aayog, ministries of finance, commerce and industry, and Home, said a report by The Hindu. ALSO READ: India received USD 55 bn in FDI in two years: Sushma Swaraj
Last year, the government had relaxed FDI in about a dozen sectors, like Construction Development, Insurance, Pension Sector, Broadcasting Sector, Tea, Coffee, Rubber, etc. These measures had resulted in increased FDI inflows at US$ 55.46 billion in financial year 2015-16, as against US$ 36.04 billion during the financial year 2013-14. The move is seen as something that will calm foreign investors, after ‘Rexit’ or the exit of Raghuram Rajan, which came on Sunday. Here are the key areas, where the FDI has been upped significantly:
- Food Products manufactured/produced in India
It has now been decided to permit 100% FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India.
- Foreign Investment in Defence Sector up to 100%While the current FDI in defence sector is 49%, ‘in the equity of a company under automatic route’, for above 49% government approval is needed on case to case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country.
- PharmaceuticalThe existent FDI policy on pharmaceutical sector provides for 100% FDI under automatic route in greenfield pharma and FDI up to 100% under government approval in brownfield pharma. With the objective of promoting the development of this sector, it has been decided to permit up to 74% FDI under automatic route in brownfield pharmaceuticals and government approval route beyond 74% will continue.
- Civil Aviation
While the current policy allows 100% FDI under automatic route in Greenfield Projects and 74% FDI in Brownfield Projects under automatic route, and FDI beyond 74% for Brownfield Projects is under government route, the revamped policy will now see 100% FDI under automatic route in Brownfield Airport projects, as well. The government will now also allow 100% FDI in scheduled airlines. Foreign airlines are currently allowed to own only 49% in a local airline.
For a detailed report about the changes made in FDI, you can click here, to access the government press release.