Cabinet Approves Amendments in FDI Policy, Policies Further Liberalized

In the financial year 2016-17, total FDI of US $ 60.08 billion has been received, which is an all-time high. The Cabinet chaired by PM Narendra Modi has approved amendments in FDI Policy and further liberalized few of the policies of FDI.

Key Highlights-
  1. 100% FDI under automatic route for Single Brand Retail Trading.
  2. 100% FDI under automatic route in Construction Development.
  3. Foreign airlines allowed to invest up to 49% under approval route in Air India.
  4. FIIs/FPIs allowed to invest in Power Exchanges through primary market.
  5. Definition of ‘medical devices’ amended in the FDI Policy.
Government approval no longer required for FDI in Single Brand Retail Trading (SBRT)
Extant FDI policy on SBRT allows 49% FDI under automatic route, and FDI beyond 49% and up to 100% through Government approval route. It has now been decided to permit 100% FDI under automatic route for SBRT.
Civil Aviation
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. However, this provision was presently not applicable to Air India, thereby implying that foreign airlines could not invest in Air India. It has now been decided to do away with this restriction and allow foreign airlines to invest up to 49% under approval route in Air India.
Construction Development: Townships, Housing, Built-up Infrastructure and Real Estate Broking Services
It has been decided to clarify that real-estate broking service does not amount to real estate business and is therefore, eligible for 100% FDI under automatic route.
Power Exchanges
Extant policy provides for 49% FDI under automatic route in Power Exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010. It has now been decided to do away with this provision, thereby allowing FIIs/FPIs to invest in Power Exchanges through primary market as well.
Source- Press Information Bureau (PIB)