India Welcomes More Foreign Investment in Retail and Airlines


Amendments in the FDI policy are "intended to liberalise and simplify the policy so as to provide ease of doing business in the country". Senior Congress leader Anand Sharma said that 100 per cent FDI in single brand retail was notified during the previous UPA government and the only change made is to allow it through the automatic route.

While foreign airlines were allowed to invest up to 49 per cent in the paid-up capital of Indian private airlines under the government approval route, this provision was not applicable to Air India. FIIs/FPIs will also be allowed to invest in Power Exchanges through primary market.

A cabinet meeting chaired by Indian Prime Minister Narendra Modi on Wednesday paved the way for 100-percent foreign investment in single-brand retail and construction development.

The foreign direct investment (FDI) policy for medical devices and audit firms associated with companies receiving overseas funds were also eased to facilitate capital inflows. The change in FDI-in-retail policy isn't as contentious, but it is a courageous move because the RSS has always been opposed to it and the BJP's traditional voter base includes a lot of traders and retailers. It is therefore, eligible for 100 per cent FDI under the automatic route.

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Anshul Gupta, Research Director at Gartner India, said that the latest decision "removes systemic friction and will allow global brands to speed up investment to begin operations sooner". Under the current policy, there is a limit of 49% FDI and for 100% foreign investment, the approval of the Government was required.

The country received more than $60 billion in FDI in the past financial year running from April 2016 to March 2017, representing an all-time high. Accordingly, the Government has chose to introduce a number of amendments in the FDI Policy.

The move should generate employment and give Indian consumers access to several worldwide brands.

Any single-brand retailer-which sell only their own products, such as IKEA or H&M-that opens stores in India has to buy at least 30% of the goods sold from Indian small and medium-size companies.