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Modi govt’s big reform push: Approves 100% FDI in Defence, Civil Aviation & Pharma

In the latest, government has announced a series of big changes on Monday in the FDI norms for single brand retail, civil aviation, airports, pharmaceuticals and animal husbandry.

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The decision to further liberalise FDI regime with the objective of “providing major impetus to employment and job creation in India” was taken at a meeting chaired by Prime Minister Narendra Modi.

This is the second major reform in the FDI space. The Centre in last November had significantly relaxed the foreign investment regime.

“With these changes, India is now the most open economy in the world for FDI,” said a commerce ministry statement.

Key Highlights

The government has allowed 100 percent in aviation policy for scheduled carriers. 49 percent FDI has been permitted under the automatic route. At present, up to 49 percent FDI is permitted in scheduled airlines. For NRIs, 100 percent FDI will continue to be allowed under automatic route.

100 percent FDI has been approved in the broadcasting carriage services such as cable networks, DTH and mobile TV and food product e-commerce.

Foreign investment in greenfield pharma projects has been approved 100 percent and 74 percent in brownfield projects. 100 percent FDI has been announced in the defence sector.

The government has also relaxed sourcing norms for up to five years for single-brand retail trading.

Relaxation in FDI norms will help foreign defence companies substantially.

As per a press release: “Now most of the sectors would be under automatic approval route, except a small negative list. With these changes, India is now the most open economy in the world for FDI.”

Entry for Apple

With relaxation of FDI norms and a relaxed sourcing regime for another five years for entities undertaking Single Brand Retail Trading of products having ‘state-of-art’ and ‘cutting edge’ technology, Apple can take a sigh of relief and plan an easy entry into the Indian markets.

FDI norms relaxed: What it means?

It will help foreign defence firms to enter india help food marketing companies help IKEA, Apple to set up stores help improve aviation sector. With the announcement that government will relax FDI norms, sharp rally in shares of the listed carriers SpiceJet, Jet Airways and InterGlobe Aviation was observed. The stocks gained over 5 per cent.

India stock markets also rallied, with the BSE Sensex rising over 250 points and the Nifty edging close to the key 8,250.

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