Cabinet approves 100% FDI in retail, construction

Government has given its nod to 100 per cent FDI in single-brand retail

More than eight decades after making its debut as a carrier of mails, the government today allowed foreign direct investment of up to 49 per cent in the debt-laden Maharaja - a move that sends out an "important message" to global investors and is expected to attract more bidders.

In turn, it will lead to larger FDI inflows contributing to growth of investment, income and employment, the government said in a statement.

"It has now been made a decision to permit 100 per cent FDI under automatic route for SBRT (single brand retail trading)", the government said in a statement.

The Union Cabinet, chaired by Prime Minister Narendra Modi, has chose to allow foreign investments, including from foreign airlines, to up to 49 per cent in Air India, provided that substantial ownership and effective control of the airline is vested in an Indian national.

Sharma said the UPA government had consciously kept Air India out of the purview of FDI though it had allowed 49 per cent FDI in the civil aviation sector.

In a statement issued after the Cabinet decisions, the party said, "The politburo of the CPI (M) also strongly opposes the decision to allow foreign airlines to invest up to 49 per cent in Air India".

The cabinet eased the local sourcing rule for foreign single-brand retailers; for five years, such entities are not required to meet the 30% target for local sourcing by their Indian units if they are already doing so for their global operations, it said.


Now, foreign airlines have been allowed to have up to 49 per cent stake under the approval route in Air India subject to certain conditions, an official release said.

The government has allowed foreign portfolio investors to purchase stakes of up to 49% in power exchanges directly under the automatic routes.

It is nearly a given that the government will have to absorb much of Air India's massive debt to entice enough interest from any private sector company. Currently, the policy provides for 49 per cent FDI under automatic route in power exchanges.

The Cabinet, chaired by Prime Minister Narendra Modi, today gave its approval to a number of amendments in the FDI policy, including those pertaining to Air India.

Sharma, a former Union Commerce and Industry minister, said the move was a "U-turn". "I don't think it's going to make much change because nearly all the major brands of the world are already here as 100 percent FDI was already allowed. So, in a way it is not a differential treatment, rather the preference that was there (has been removed)", Raju said about the FDI norms relaxation.

"Global brands across different categories, from apparel to electronics to accessories will be aided through this, providing further options to Indian consumers and improving IndiaÂ's ranking in ease of doing business", he added. After the amendments, no government approval is required for 100 per cent investment. This is the second round of FDI reform that the Modi government has unleashed.

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