New Delhi: Despite the severe drubbing that the BJP received in Bihar elections, Modi government today decided to change the narrative and announced big bang economic reforms in 15 key sectors including agriculture, civil aviation, defence and construction.
The measures announced by the government will open avenues for big ticket Foreign Direct Investment in these sectors that will boost the economic growth of India.
Apart from increasing the FDI cap in 15 key sectors, the government has opened up the manufacturing sector for wholesale, retail and e-commerce.
These steps have been announced just ahead of Prime Minister Modi's visit to United Kingdom and Turkey where he is expected to invite major investment by foreign companies.
What is noticeable is that the government, through these steps, aims to create friendly environment for foreign investors that will further boost Indian economy.
These reforms will ease up rules that are expected to bring more investment in country than ever before.
In the January-June period, India surpassed US and China as the biggest Foreign Direct Investment (FDI) destination, garnering $31 billion investments compared with $28 billion attracted by China and $27 billion by the US.
Here are major takeaways of the big FDI push announced by the govt today:
Single window clearance for projects up to 5000 crores, saving time for investors
The reforms will make it easier for overseas companies to do business in India, a country notorious for its red tape and labyrinthine regulation.
Taking a step forward in this direction, the govt has authorised Foreign Investment Promotion Board (FIPB) to clear projects up to Rs 5000 crores from existing Rs 3000 crore, thus giving FIPB more financial power than ever before. The FIPB now can give single window clearance for investment projects up to 5000 crore.
Announcing the reforms, Finance Minister Arun Jaitley said, "Investors prefer to invest in destinations where growth is picking up, returns seem likely and where it is easy to do business.
Automatic route in duty free shops located and operated in the customs bonded areas will ease up the investment in the sector.
The reforms will bring major change to defence sector where India is highly dependent of foreign made defence equipment.
Big push for ‘Make in India' in defence sector
The government allowed foreign investment up to 49% in defence sector under the automatic route from the current approval route. Besides, portfolio investment and investments by foreign capital venture investors have been raised to 49% from 24% at present.
Defence is one sector that needs massive investment. There are many overseas players who have shown keen interest in investing in defence projects given the fact that India has emerged as world's largest importer of defence equipments.
Higher and hassle-free FDI in both news & non-news uplinking
FDI cap in DTH, media networks was raised from 74% to 100%. However, condition of seeking approval from FIPB remains same.
Uplinking of news and current affairs on TV channels would draw FDI of 49% from the current 26%.
In non-news, uplinking is allowed up to 100% as is the norm now, but it could be done under automatic route against the government approval at present.
Business made easy for Manufacturing Sector:
Manufacturers will now be allowed to sell their products through e-commerce without the government approval. This will go a long way in widening the business-volume of manufacturers.
Boost for agriculture sector:
In a major boost to agrarian economy, the govt has allowed 100% FDI in sectors of coffee, rubber, cardamom, palm oil, olive oil plantations
Big push to Private sector banking:
Government has allowed composite foreign investment up to 74% in private sector banking. This was an area which did not see the complete fungibility of foreign investment, when the government allowed it for other areas earlier.
