Govt relaxes FDI norms for multiple sectors to fight slowdown, boost growth

FDI norms have been relaxed with respect to coal mining, digital media, and domestic sourcing in single-brand retail.

Aug 29, 2019 02:08 IST India Infoline News Service

Piyush Goyal

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi on Wednesday approved the proposal for Review of Foreign Direct Investment (FDI) on various sectors to boost the economy amid the slowdown.

As per UNCTAD's World Investment Report 2019, global FDI flows slid by 13% in 2018, to $1.3tn from $1.5tn the previous year - the third consecutive annual decline.

Accordingly, the Government has decided to introduce a number of amendments in the FDI Policy:

Coal Mining

  • As per the present FDI policy, 100% FDI under automatic route is allowed for coal & lignite mining for captive consumption by power projects, iron & steel and cement units and other eligible activities permitted under and subject to applicable laws and regulations.
  • Further, 100% FDI under automatic route is also permitted for setting up coal processing plants like washeries subject to the condition that the company shall not do coal mining and shall not sell washed coal or sized coal from its coal processing plants in the open market and shall supply the washed or sized coal to those parties who are supplying raw coal to coal processing plants for washing or sizing.
  • It has been decided to permit 100% FDI under automatic route for sale of coal, for coal mining activities including associated processing infrastructure subject to provisions of Coal Mines (special provisions) Act, 2015 and the Mines and Minerals (development and regulation) Act, 1957 as amended from time to time, and other relevant acts on the subject. "Associated Processing Infrastructure" would include coal washery, crushing, coal handling, and separation (magnetic and non-magnetic)
Contract Manufacturing
  • The extant FDI policy provides for 100% FDI under automatic route in manufacturing sector. There is no specific provision for Contract Manufacturing in the Policy. In order to provide clarity on contract manufacturing, it has been decided to allow 100% FDI under automatic route in contract manufacturing in India as well.
  • Subject to the provisions of the FDI policy, foreign investment in 'manufacturing' sector is under automatic route. Manufacturing activities may be conducted either by the investee entity or through contract manufacturing in India under a legally tenable contract, whether on Principal to Principal or Principal to Agent basis.

Single Brand Retail Trading (SBRT)

  • The extant FDI Policy provides that 30% of value of goods has to be procured from India if SBRT entity has FDI more than 51%. Further, as regards local sourcing requirement, the same can be met as an average during the first 5 years, and thereafter annually towards its India operations.
  • With a view to provide greater flexibility and ease of operations to SBRT entities, it has been decided that all procurements made from India by the SBRT entity for that single brand shall be counted towards local sourcing, irrespective of whether the goods procured are sold in India or exported.
  • Further, the current cap of considering exports for 5 years only is proposed to be removed, to give an impetus to exports.
Digital Media
  • The extant FDI policy provides for 49% FDI under approval route in Up-linking of 'News &Current Affairs' TV Channels.
  • It has been decided to permit 26% FDI under government route for uploading/ streaming of News & Current Affairs through Digital Media, on the lines of print media.
Source: PIB 

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