Profit

New FDI Norms Set To Make India A More Attractive Investment Destination: 10 Points

Analysts say the relaxation of FDI norms is a positive move for global companies such as Apple and IKEA.

 Share
EMAIL
PRINT
COMMENTS
New FDI Norms Set To Make India A More Attractive Investment Destination: 10 Points

Single-brand retailers will be allowed to open online stores bore setting up brick-and-mortar stores

In its bid to push investments and revive growth, the Union Cabinet on Wednesday eased FDI or foreign direct investment norms in four sectors. Allowing 100 per cent foreign investment in coal mining as well as contract manufacturing, the government also removed restrictions that made it difficult for foreign brands to conduct business in the country. Analysts say the relaxation of FDI norms is a positive move for global giants such as Apple and IKEA, which are likely to find India a more lucrative market. The move comes days after the government announced a slew of measures - including a reversal of higher taxes on foreign investors announced in Budget - to push growth, as it aims to make the country a $5-trillion economy in five years.
Here are 10 things to know:
  1. In order to push single brand retailers to invest in the country, the government decided to relax sourcing norms for single-brand retailers. Now, single-brand retail firms will be allowed to open online stores bore setting up brick-and-mortar stores. Existing rules forced single-brand retailers to set up brick-and-mortar stores in order to sell products online.
  2. Some say the new norms will encourage foreign brands to capitalise on the Indian market. "This is excellent news for foreign retailers giants like IKEA and Apple who will now find Indian market more lucrative to invest and conduct business in," said Shobhit Agarwal, managing director and CEO of realty services company ANAROCK Capital. "Many foreign brands have been in a wait-and-watch mode on account of the difficulties so far perceived in meeting the mandated sourcing norms."
  3. In August last year, Swedish furniture retailer IKEA opened its first Indian store in Hyderabad, five years after it received regulatory nod to invest Rs 10,500 crore and open 25 stores in the country by 2025.
  4. iPhone maker Apple on Thursday said it looks forward to welcoming customers at its first branded retail store in India soon. The Cupertino-based iPhone maker said it appreciates the support and hard work done by Prime Minister Narendra Modi -- on the path to make India one of the world's greatest economies.
  5. The new rules also remove restrictions on single-brand retailers that forced them to source 30 per cent of their products locally. The US-based tech major had been lobbying against the rules for years.
  6. The government also permitted 100 per cent FDI in the coal mining sector and related infrastructure via automatic route, in order to "attract international players to create an efficient and competitive coal market". Till now, FDI was only allowed in coal mines allotted for captive use, meaning for use by the companies themselves.
  7. Currently, a majority of the country's coal requirement is fulfilled by Coal India. The new mining investment policy will to open up investment avenues for companies such as US-based PeaBody, Switzerland-based Glencore and Australia's BHP Group.
  8. In a move to push for Make in India, the Cabinet decided to permit 100 per cent FDI via automatic route in contract manufacturing. The initiative will help India compete as a manufacturing hub with Asian peers, say analysts.
  9. The government also allowed 26 per cent overseas investment in digital media companies with its approval for uploading and streaming of news and current affairs, on the lines of print media.
  10. Economists say the FDI changes will drive consumption and investments. "FDI liberalization can supplement overall investment in the country and is hence useful. However, FDI has limitations when linked with economic growth as it is a very small part of overall investment," Madan Sabnavis, chief economist at credit ratings agency CARE Ratings, told NDTV.




Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.

NDTV Beeps - your daily newsletter

................................ Advertisement ................................

................................ Advertisement ................................

................................ Advertisement ................................

Top