India on Monday announced sweeping reforms to
rules on foreign direct investment (FDI), opening up its defence and civil
aviation sectors to complete outside ownership.
Prime
Minister Narendra Modi said the changes would make India "the most open
economy in the world for FDI" and provide a "major impetus to
employment and job creation".
Here
are the key changes:
AVIATION
The
government has allowed 100 percent FDI in civil aviation, of which 49 percent
is under the "automatic route", meaning that it would not require
government approval. Beyond 49 percent would need to be approved by the
government.
In
addition, 100 percent FDI would be allowed in brownfield, or existing, airport
projects under the automatic route.
The
changes could benefit Gulf carriers such as Qatar Airways and Dubai's Emirates,
which have previously indicated an interest in Indian aviation. Indian aviation
firms Jet Airways, Spicejet and Indigo Airlines' parent InterGlobe all ended
the day on a high.
SINGLE-BRAND
RETAIL
The
government said it has decided to relax local sourcing norms for up to three
years for companies undertaking single brand retail trading. Among these, the
companies selling products with "state of the art" and "cutting
edge" technology would get another five years of local sourcing exemption.
Apple
Inc is expected to be a key beneficiary of this provision, as it can
immediately open its doors in India, a market it is relying on to offset
slowing growth in China and the United States. Single-brand retailers like
furniture giant IKEA also stand to benefit.
DEFENCE
The
government has allowed up to 100 percent FDI in defence and done away with the
requirement of "state of the art" technology while considering FDI
cases of above 49 percent investment.
The
move comes after India earlier this year outlined plans to focus defence
spending more on the domestic market instead of importing combat planes, ships
and submarines.
PHARMACEUTICALS
The
government has approved 74 percent FDI under the automatic route in brownfield,
and beyond that would continue to require government approval.
Analysts
said the new norms bode well for foreign drugmakers looking to get a pie of
India's lucrative drugs market, and merger and acquisitions activity in the
sector could pick up.
FOOD
PRODUCTS
The
government has permitted 100 percent FDI under the government approval route
for trading, including through e-commerce, of food products made in India.
CABLE
NETWORKS/DTH/MOBILE TV
The
government has allowed 100 percent FDI under the automatic route.
PRIVATE
SECURITY AGENCIES
The
government has permitted up to 49 percent FDI under the automatic route. Beyond
49 percent and up to 74 percent would require government approval.
ANIMAL
HUSBANDRY
Current
norms allow 100 percent FDI in animal husbandry, pisciculture, aquaculture and
apiculture under the automatic route, under "controlled conditions".
Under the changes introduced on Monday, the government said it has done away
with the requirement of "controlled conditions".
Representative
Image
Source:
Reuters
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