FDI policy liberalised, 100% FDI now in retail, construction

Regarding the decision of the government of allowing 100 per cent FDI in single-brand retail trade, the CITU-the trade union of the CPI (M) - condemned the move and said that the decision would increase the hardship of traditional retail market. It received a $5.8 billion in bailout funds from the taxpayer, but still needs more capital to become profitable. It is therefore, eligible for 100 per cent FDI under the automatic route.

The cabinet also allowed foreign airlines to invest up to 49 percent in the debt-ridden national carrier Air India, subject to government approval.

The amendments are meant to liberalise and simplify the FDI policy so as to provide ease of doing business.

"It has been chose to clarify that real-estate broking service does not amount to real estate business and is therefore, eligible for 100% FDI under automatic route", the statement said.

He has said that the government is taking the plea of huge loss Air India is being burdened with to justify its move, but the Centre is seeking to hide the fact that the carrier has been pushed to this situation not because of its management's failure but owing to "imposition of disastrous decisions on the company by successive governments at the Centre".

While India has seen its economy slowing recently, it has managed to secure a lot of foreign capital even without the new opportunities in place for entrepreneurs from overseas. 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.

The Union Cabinet has given its approval to a number of amendments in the FDI Policy.

However, FII/FPI (foreign portfolio investors) purchases were restricted to secondary market only.

"Global brands across different categories, from apparel to electronics to accessories will be aided through this, providing further options to Indian consumers and improving India?s ranking in ease of doing business", he added.

India's decision to relax FDI norms in various sectors would make it a much more attractive destination for overseas investors, US-India Strategic Partnership Forum (USISPF) said today. It remains an unfinished agenda for the government.

For single brand retail trading, there is no approval required of the Government for 100% FDI.