NEW DELHI: The Narendra Modi government on Friday proposed relaxation in norms for Foreign Direct Investment (FDI) in sectors including media, aviation, insurance, and single brand retail with a view to attract more overseas investment.
While presenting her maiden budget in the Parliament, Finance Minister Nirmala Sitharaman said that India’s FDI inflows in 2018-19 grew by 6 per cent to USD 64.37 billion.
“I propose to further consolidate, the gains in order to make India more attractive FDI destination. The government will examine suggestions of further opening up of FDI in aviation, media, AVGC (Animation, Visual effects, Gaming and Comics) and insurance sector in consultation with stakeholders,” the FM said.
The FM minister said 100 per cent foreign direct investment (FDI) will be permitted for insurance intermediaries, and local sourcing norms will be eased for FDI in the single brand retail sector.
The Finance Minister said that the Government will examine suggestions of further opening up of FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders.
During her Budget speech, the Finance Minister added that time has come that India not only gets integrated into global value chain of production of goods and services, but also become part of the global financial system to mobilise global savings, mostly institutionalized in pension, insurance and sovereign wealth funds.
Towards this end, the Government is contemplating organizing an Annual Global Investors Meet in India, using National Infrastructure Investment Fund (NIIF) as the anchor, to get all three sets of global players- top industrialists/corporate honchos, top pension/insurance/sovereign wealth funds and top digital technology/venture funds.
The Finance Minister stated that an important determinant of attracting cross-border investments is availability of investible stock to the FPIs. This issue assumes greater significance in view of the gradual shift, from stock targeted investments, towards passive investment whereby funds track global indices composition of which depends upon available floating stock.
Union Budget 2019-20 propose to increase the statutory limit for FPI investment in a company from 24% to sectoral foreign investment limit with option given to the concerned corporates to limit it to a lower threshold, the Minister added.
The Finance Minister also stated that as a key source of capital to the Indian economy, it is important to ensure a harmonized and hassle free investment experience for Foreign Portfolio Investors. Hence, it is proposed to rationalize and streamline the existing Know Your Customer (KYC) norms for FPIs to make it more investor friendly without compromising the integrity of cross-border capital flows.
The Finance Minister further proposed to merge the NRI-Portfolio Investment Scheme Route with Foreign Portfolio Investment Route with a view to provide NRIs with seamless access to Indian equities.