Cabinet clears 49% FDI in Air India

11 January, 2018, 08:55 | Author: Manuel Hopkins
  • Big FDI Push For Single Brand Retail Air India Gets Cabinet Nod 10 Points

India allows 100% FDI in single-brand retail, but investment beyond 49% requires prior government approval.

Janne Einola, country manager at the India unit of Swedish fashion retailer H & M Hennes & Mauritz AB, said: "We are happy to hear about the India sourcing requirement being offset towards H&M's global sourcing from India; while it is in the right direction, we look forward to the same relaxation for the period beyond the initial five years as well, which works towards ease of doing business in India". Also, 100 per cent FDI under automatic route in construction development has been allowed.

While allowing foreign investors, including overseas airlines, to have stake in Air India, the government has also made it clear that the national carrier's substantial ownership and effective control would remain with an Indian national.

"Having taken the decision to privatise Air India, the Modi government is now moving towards handing over Air India to a foreign airline".

"It has been chose to permit single brand retail trading entity to set off its incremental sourcing of goods from India for global operations during initial 5 years, beginning 1st April of the year of the opening of first store against the mandatory sourcing requirement of 30% of purchases from India", it said.

Till date, 49 per cent FDI was allowed under automatic route, while beyond that government approval was required.

The cabinet has also relaxed FDI norms for power exchanges.

Air India, which is staying afloat on taxpayers' money, is estimated to have a debt burden of more than Rs 50,000 crore.

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In the sector of power exchanges, the government said: "Extant policy provides for 49% FDI under automatic route in Power Exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010". It is expected to report a net loss of Rs 3,579 crore for 2017-18. "It has now been chose to permit 100% FDI under automatic route for SBRT", the statement added.

This opens avenues for Indian firms to raise more fund from foreign investors and makes it easier for them to pursue larger domestic and global expansion strategies, Sood added.

Commerce and Industry Minister Suresh Prabhu said the decisions would help "remove roadblocks" for receiving foreign investments and expressed the hope that relaxation of norms would facilitate faster development of the economy.

The Communist Party of India (Marxist) pointed out that the Bharatiya Janata Party (BJP) has "hypocritically reversed it position" on the issue as it was opposed to FDI in retail trade when in the opposition.

The UPA government has earlier extended the FDI to 49% in this sector. The definition of "medical devices" has been amended in the FDI policy, an official release said.

Deloitte India Partner Rajat Wahi also said global brands across different categories will be aided through this, providing further options to Indian consumers and improving India's ranking in ease of doing business.

This is unedited, unformatted feed from the Press Trust of India wire.

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