Cabinet approves 100% FDI in single brand retail, construction development

Ivan Schwartz
January 11, 2018

Permitting 49 per cent foreign direct investment in Air India brings the airline on a par with other domestic carriers and does away with the preferential treatment that was extended to the national carrier, Civil Aviation Minister Ashok Gajapathi Raju said on Wednesday. He said in a statement that the CAIT would soon declare a nationwide strategy to oppose the "brutal move" by the government.

The Cabinet also clarified that "real-estate broking service does not amount to real estate business and is therefore, eligible for 100 per cent FDI under automatic route".

As per the extant policy, foreign airlines are allowed to invest under Government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49% of their paid-up capital.

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

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.

"It has now been made a decision to do away with this restriction and allow foreign airlines to invest up to 49% under the approval route in Air India", the government said.

It also said that Core investing companies and an Indian company engaged in investment activities would be allowed to receive FDI under automatic route provided their activities are regulated by financial sector regulator like RBI or SEBI.

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The Union Cabinet on 28 June 2017 gave an "in-principle" go-ahead for the strategic disinvestment of debt-ridden Air India after tasking a Group of Ministers to work out its modalities.

"It has now been decided that for investments in automatic route sectors, requiring approval only on the matter of investment being from country of concern, FDI applications would be processed by Department of Industrial Policy and Promotion (DIPP) for government approval".

Till now, FDI up to 49 percent was permitted under the automatic route, while the government's permission was needed for FDI above that. After the amendments, no government approval is required for 100 per cent investment.

The Confederation of All India Traders (CAIT) has strongly opposed the move. "BJP's "Booklet on FDI"- "Government of Foreigners" - Narendra Modi. However, FII/FPI purchases were restricted to secondary market only".

"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.

On whether the move will attract foreign bidders for Air India's disinvestment, Raju said, "We would like them to come and participate".

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

Other reports by GizPress

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