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Government announces FDI reforms in 15 sectors

13 Nov 2015 Evaluate

In order to give much needed momentum to the economic reforms and to drum up investment and speed up growth, Prime Minister Narendra announced Foreign Direct Investment (FDI) reforms in as many as 15 sectors which includes mining, civil aviation, defence, broadcasting, construction, agriculture and animal husbandry, plantation and manufacturing.

The government has opened up the manufacturing Sector for wholesale, retail and e-Commerce so that the industries are motivated to Make In India and sell it to the customers here instead of importing from other countries. In the construction development sector, minimum capitalisation norms and floor area restrictions have been removed. The government has also eased exit norms for foreign players in the sector. 100 per cent FDI under automatic route has been allowed in completed projects for operation and management of townships, malls/shopping complexes and business centres.

In the defence sector, 49 per cent foreign investment has been allowed under the automatic route and anything beyond through the FIPB nod.  Further, in the broadcasting sector, 100 per cent FDI has been allowed in DTH, teleports, mobile TV and cable networks. Of this, 49 per cent will be allowed under automatic route and beyond that will need FIPB nod.

Besides, the proposed reforms also enhance the limit of Foreign Investment Promotion Board (FIPB) to Rs 5,000 crore from current Rs 3,000 crore. It also contain many other long pending corrections including those being felt by the limited liability partnerships as well as NRI owned companies who seem motivated to invest in India. Few other proposals seek to enhance the sectoral caps so that foreign investors don't have to face fragmented ownership issues and get motivated to deploy their resources and technology with full force.

According to the government's release, 'The root of these reforms is to further ease, rationalise and simplify the process of foreign investments in the country and to put more and more FDI proposals on automatic route instead of government route where time and energy of the investors is wasted. The government’s decision on liberalising FDI policy is a welcome step and is part of improving ease of doing business. The reforms came just a day before PM Modi left for his first visit to the United Kingdom, focused predominantly on business and investment.

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