Department of Industrial Policy and Promotion under Ministry of Commerce and Industry, which is the decision making body for all FDI (Foreign Direct Investment) related matters in India, have released the updated and consolidated FDI Policy of India, which is effective May 12, 2015.
And there is some good news for foreign retailers as the decision of 51% FDI in multi brand retail has been retained. Originally formulated by the UPA Govt. in 2012, BJP had opposed this decision of allowing FDI in multi brand retail. But once in power, BJP and NDA have given green signal to this decision.
100% FDI in single brand retail is already allowed in India.
What Are The Updates?
The 119 page policy document, which was released on Tuesday, the Govt. has made some specific changes in FDI implementations and operations; but the majority of the terms and conditions of the earlier draft remain same.
As per the document, Govt. may update FDI Policy every year, considering the changes and innovations which are happening at shorter intervals.
Some major highlights include:
– FDI in Defense and Insurance has been increased to 49% from 26% earlier. Govt. had issued notification about this change earlier, but it has now been incorporated in the official FDI policy.
– No Indian insurance company will allow 100% transfer of power and control to any foreign entity
– 100% FDI in Indian Railways has now been allowed, only in the areas of “construction, operation and maintenance of suburban corridor projects through PPP (public-private partnership), high speed trains, dedicated freight lines, railway electrification and mass rapid transport systems.”
– Important liberalization has been induced in FDI for medical and construction industries
– 100% FDI in manufacturing and designing of medical devices is now allowed
– Foreign investors residing outside India can invest in Indian startups, which are venture backed and registered via Companies Act, subjected to the governing rules of “pricing guidelines, reporting requirements, mode of payment, minimum capitalization norms”
– However, if a foreign investor decides to invest in a company which is only into investing, then prior Govt. approval needs to be taken
– FDI is prohibited in: Lottery business, Gambling, Chit Funds, Trading in TDR (Transferable Development Rights), Real Estate Business, Manufacturing of Cigar and other tobacco products and Atomic Energy.
– 100% FDI is now allowed in: Floriculture, Horticulture, Apiculture and Cultivation of Vegetables & Mushrooms under controlled conditions; Animal farming, Tea plantations, mining, Coal industry, Oil and Natural Gas exploration, Petroleum, Publishing of scientific and technical journals, Publication of facsimile edition of foreign newspapers
– However, for publication of news related with current affairs (both Indian and Foreign news), FDI of only 26% is allowed
– FDI in cable and satellite TV niche is capped at 74% and 49% respectively. FM and Current News TV Channels will also have 26% cap in FDI. However, in case of non-news TV channels and Radio is allowed 100% FDI
You can view the full document of the new, updated and consolidated FDI Policy here. Here are the latest statistics on all FDI which entered India in the last 15 years, along with the specific numbers which all the countries brought in.
Global multi brand retailers such as TESCO and Walmart would be closely following this news. TATA and TESCO have already announced India’s first foreign multi brand retail outlet, Walmart is still testing the market with their ecommerce portal. Carrefour is also in talks about opening their stores in India very soon.
But AAP Will Not Allow FDI In Delhi
Ironically, New Delhi, the national capital of India, will not allow FDI. Immediately after this new policy document was released, Deputy Chief Minister of Delhi, Manish Sisodia said, “We will not allow entry of FDI in retail sector in the national capital.”
In the official statement issues by Delhi Govt., it was said, “Entry of FDI in the retail sector will be detrimental to the interests of traders and will lead to unemployment,”, adding, “The Delhi government does not have blind opposition to the FDI, but it is of the firm view that the national capital does not require its entry in the retail sector at this juncture,”
If the capital city of India opposes FDI, then we are actually giving a confused signal to the outside world.
Do share your views about FDI policy of India – Will it hard the nation or take us forward?
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