Monday, 22 January, 2018

India allows 100 percent FDI in single-brand retail via automatic route

Existing rules allow foreign airlines to own as much as 49% in an Indian airline with the exception of Air India Existing rules allow foreign airlines to own as much as 49% in an Indian airline with the exception of Air India
Marlene Weaver | 10 January, 2018, 13:40

In a move created to expedite the strategic divestment in Air India, the Cabinet on Wednesday made a decision to open up the national carrier for foreign direct investment (FDI) up to 49 per cent under the approval route.

Earlier, only 49% FDI was allowed under automatic route and FDI beyond 49% and up to 100% through Government approval route.

"This step to liberalise FDI in retail trade will have harmful consequences for domestic retail traders and shopkeepers", a statement from the Communist Party of India-Marxist said. "Now being in the government, it has hypocritically reversed its position".

Prime Minister Narendra Modi's cabinet gave the go-ahead last year to sell Air India, after successive governments spent billions of dollars in recent years to keep it going.

Under the present policy, foreign airlines are allowed to invest under government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49 per cent of their paid-up capital.

It brings Air India, which previously had to be fully locally owned, in line with the country's other local airlines in which foreign investment is allowed.

No. 8 Red Raiders drop road contest to No. 9 Oklahoma
Oklahoma: The Sooners didn't want to lose two games so early in league play in a season where the conference race looks wide open. Texas Tech is tied with West Virginia for the Big 12 lead and is 14-1 with an eight-game winning streak.

This is the second round of FDI reform that the Modi government has unleashed.

Further it has clarified that real-estate broking service does not amount to real estate business and is therefore, eligible for 100 per cent FDI under automatic route. But substantial ownership and effective control of Air India must remain with an Indian national, the government said in a statement.

During the year 2014-15, total FDI inflows received were United States $ 45.15 billion as against United States $ 36.05 billion in 2013-14.

During 2015-16, India received total FDI of $55.46 billion.

The extant policy provides for 49% FDI under automatic route in Power Exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010. A special goal vehicle (SPV) will be formed, in which all the real estate and artefacts belonging to the airline will be housed, according to a ministry official. However, it added the policy had so far restricted FII/FPI purchases restricted to secondary market only. In the FY 2016-17, total FDI of $60.08 billion has been received, which is an all-time high. It also amended the definition of "medical devices" in its FDI policy.

"Cases under the government approval route, also requiring security clearance with respect to countries of concern, will continue to be processed by concerned administrative department or ministry".

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