New Delhi: Prime Minister Narendra Modi will review the foreign direct investment (FDI) policy tomorrow with a view to removing bottlenecks to overseas inflows, sources said.
At the meeting, the commerce and industry ministry will make a detailed presentation on proposed changes to streamline the FDI regime in the country.
Finance Minister Arun Jaitley, Commerce and Industry Minister Nirmala Sitharaman and Secretary, Department of Industrial Policy and Promotion (DIPP), Ramesh Abhishek will attend the meeting, sources who did not wish to be identified said.
The meeting assumes significance as the government is considering relaxing FDI norms in several sectors, including retail and construction. Also, on the table is the proposal to ease rules in print media, construction, single brand and multi-brand retail trading.
Plans are afoot to loosen the policy in the construction sector, under which an Indian company could be allowed to bring in FDI even for undeveloped plots in any project.
As per the current policy, 100 percent FDI is allowed in the construction sector subject to various conditions. As per rules, Indian investee company is permitted to sell only developed plots, which means plots where trunk infrastructure- roads, water supply, street lighting, drainage and sewerage — has been made available.
The sources said the government may impose certain restrictions while making changes under this provision. The government is weighing the option of permitting overseas retailers to open stores for selling ‘Made in India’ products only.
Although the current FDI policy allows overseas players to hold 51 per cent stake in an Indian retail company, the BJP in its election manifesto had opposed foreign investment in the retail space. There are also plans to permit 100 per cent foreign investment through automatic route in single brand retail to attract a larger number of global players into the sector.
Currently, FDI up to 49 per cent is permitted under the automatic route, but beyond that limit, government nod is required.
Union Food Processing Minister Harsimrat Kaur Badal has been pitching for allowing foreign players to sell non—food items along with food products processed and manufactured in India under the FDI in food policy. The whole exercise is aimed at providing investor-friendly climate to foreign players and in turn attract more FDI to boost economic growth and create jobs.
The easing of the policy would be on the lines of the announcements made by Finance Minister Arun Jaitley in the Budget for 2017-18.
The government last year relaxed FDI norms in over a dozen sectors, including defence, civil aviation, construction and development, private security agencies, real estate and news broadcasting. Foreign investments are considered crucial for India, which needs around USD 1 trillion to overhaul its infrastructure such as ports, airports and highways to boost growth.
FDI also helps improve the country’s balance of payments situation and strengthen the rupee against other global currencies, especially the US dollar.