PM Modi's big-ticket reforms: Govt eases FDI norms in 15 sectors

PM Modi asserted that the country is "unstoppable" on the path of economic progress and the government wanted the world to see the tremendous opportunities India offers.

New Delhi: Unveiling sweeping liberalisation of foreign investment norms, the government on Tuesday opened up 15 sectors including real estate, defence, civil aviation and news broadcasting in a bid to push up reforms days after BJP's debacle in Bihar and ahead of the Prime Minister's UK visit.

While restrictions in the construction sector were freed up by allowing overseas investors to exit and repatriate investment even before project completion, foreign direct investment (FDI) up to 49 percent stake in defence firms and regional airlines has been allowed without government nod.

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Prime Minister Narendra Modi described the easing of FDI norms in 32 investment points as reflection of "unequivocal and unwavering" commitment of the government to development and reforms as they should touch life of every citizen.

He asserted that the country is "unstoppable" on the path of economic progress and the government wanted the world to see the tremendous opportunities India offers.

The raft of reforms, aimed at boosting investor confidence and drumming up FDI for faster growth, comes ahead of Modi's visit to the UK beginning November 12.

Talking to reporters, Finance Minister Arun Jaitley said: "Reform is always an ongoing process, there is no finishing line as far as reforms are concerned".

When asked whether the FDI reforms would also include multi-brand retail, he said that there is no change in the existing policy for the sector.

As part of the reform exercise, the government has allowed 100 percent FDI in cable and direct-to-home TV operators, duty free shops and investment through automatic route in limited liability partnerships.

It also permitted portfolio investors to buy up to 74 percent in local private banks, with full fungibility, while palm, coffee and rubber plantations have been opened up for the first time.

Rules for sourcing for single brand retailers particularly for high-tech have been eased by allowing them to sell online without specific permissions. But there is no change in 51 percent limit for retailers like Wal-Mart in multi-brand retailing.

The government also raised financial power of the Foreign Investment Promotion Board (FIPB) to give single window clearance for investment projects of up to Rs 5,000 crore from Rs 3,000 crore currently.

"Today's FDI related reforms will touch 15 sectors and benefit youth. Government's commitment to development and reforms is unequivocal and unwavering," Modi tweeted soon after the government made the announcement.

"Today's reforms are another example of emphasis on Minimum Government, Maximum Governance. They will ease, rationalise and simplify processes," he said in another tweet.

DIPP Secretary Amitabh Kant said: "This is Diwali gift for investors. This is the biggest big bang reform of the government."

In the defence sector, 49 percent foreign investment has been allowed under the automatic route and anything beyond through the Foreign Investment Promotion Board (FIPB) nod.

Earlier, the investors were required to take approval of Cabinet Committee on Security for foreign investment above 49 per cent in the defence sector.

"Portfolio investment and investment by Foreign Venture Capital Investor (FVCIs) will be allowed up to permitted automatic route level of 49 percent," it clarified.

In the broadcasting sector, 100 percent FDI has been allowed in DTH, teleports, mobile TV and cable networks. Of this, 49 per cent will be allowed under automatic route and beyond that will need FIPB nod.

In the case of terrestrial broadcasting FM (FM radio) and uplinking of news and current affairs' TV channels, the foreign investment limit has been raised from 26 percent to 49 percent under the approval route.

In the private banking sector, the government has introduced full fungibility of foreign investment and accordingly, "FIIs/FPIs/QFIs, following due procedure, can now invest up to sectoral limit of 74 percent, provided there is no change of control and management of the investee company".

Earlier, portfolio investment was permitted up to 49 percent.

The government allowed 100 percent FDI under automatic route in duty-free shops.