Government opens up FDI door further

Our Bureau | | Updated on: Dec 06, 2021

Piyush Goyal | Photo Credit: Kamal Narang

Cabinet eases norms on single brand retail trade; provides booster dose for sugar exports, contract manufacturing

To help revive economic activity by attracting more foreign direct investment (FDI), the Union Cabinet on Wednesday relaxed several rules in areas such as single-brand retail, contract manufacturing, coal mining and digital media. Most of the decisions taken on Wednesday are in line with the announcements made in the Union Budget last month.

The Union Cabinet has also approved setting up of 75 government medical colleges in areas where no such colleges exist; extending export subsidy to 6 million tonnes of sugar worth ₹6,268 crore; and establishing an international Coalition for Disaster Resilient Infrastructure (CDRI), with a supporting Secretariat Office in New Delhi.

Also, 100 per cent FDI under the automatic route has been allowed in contract manufacturing to give a boost to domestic manufacturing, Commerce and Industry Minister Piyush Goyal informed the media after the Cabinet meeting.

“Manufacturing through contract contributes equally to the objective of Make in India,” an official release said.

The government has also diluted the current 30 per cent domestic sourcing norms for the single brand retail trade (SBRT) sector. This has been a long-standing demand of multinational companies such as Apple.

“With a view to providing 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 five years only is proposed to be removed, to give an impetus to exports,” the statement added.

Moreover, incremental sourcing for global operations by non-resident entities in single brand retail trading, either directly or through their group companies, will also be counted towards local sourcing requirement for the first five years.

It has also been decided that ‘sourcing of goods from India for global operations’ can be done directly by the entity undertaking SBRT or its group companies (resident or non-resident), or indirectly by them through a third party under a legally tenable agreement.

Another important decision on the SBRT is that now single brand retailers can start online sales, without mandatory prior setting up of a brick-and-mortar store. “The brick-and-mortar stores can be set up two years after the online operations start,” Goyal said.

In the coal sector, it has been decided to permit 100 per cent FDI under the automatic route for sale of coal, coal mining activities including associated processing infrastructure and other relevant acts on the subject.

‘Associated Processing Infrastructure’ would include coal washery, crushing, coal handling and separation (magnetic and non-magnetic), the Minister said.

FDI rules relating to digital media have also been liberalised. It has been decided to permit 26 per cent FDI under government route for uploading/streaming of news and current affairs through digital media, on the lines of the print media.

The Budget decision of allowing 100 percent FDI in insurance intermediaries has also been notified.


Big-bang announcements

*  75 new medical colleges to come in areas that have none now

 * Domestic sourcing norms for single brand retail firms diluted

*  100 per cent FDI in all coal sector activities permitted

* 26 per cent FDI in digital media allowed




Published on August 28, 2019
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