In less than a week after Finance Minister Nirmala Sitharaman announced a slew of measures to lift the sagging economy, the Union Cabinet on Wednesday unleashed FDI reforms across sectors to lure foreign investors to India.  In a fresh round of FDI reforms, the government eased the local sourcing norms for foreign investors-led single-brand retailers, allowed up to 26% FDI in digital media, and announced that 100% foreign investment will be allowed for coal mining and contract manufacturing.

Earlier, single-brand retail chains with more than 51% FDI had to source 30% of their goods from the domestic market. Now, the definition of sourcing norm has been expanded to allow companies to consider their exports from India as part of their local sourcing. Companies can now source local products for exports directly or from a group company or even a third-party firm working under legal contract with it.
Moreover, single-brand retailers are now allowed to start online sales, waiving the earlier condition of setting up a mandatory brick-and-mortar store first.

“Due to ongoing tensions in the world, companies are looking for new places to set up their manufacturing facilities. Some FDI norms were posing hurdles in attracting such entities to India. These norms have been liberalised to a great extent. We believe it will help with ease of doing business. It will boost economic growth, promote Make in India and create job opportunities,” Commerce Minister Piyush Goyal said while briefing reporters after the Cabinet meeting.

Multinational giants such as Apple, which wanted to set up a chain of stores in India but was bothered by the sourcing norms, will benefit from the new norms. India is currently engaged in a trade spat with the US and the move could help ease trade tensions between the two nations.

The government also clarified that 100% FDI is permitted in contract manufacturing. While contract manufacturers such as Foxconn, which makes iPhones for Apple, have set up shop in India, till now there was no clarity on which FDI rules applied to them.  The government also clarified that 100% FDI will be allowed in coal mining and associated infrastructure under automatic route.

Another clarification was on FDI in digital media. Goyal said digital media can have up to 26% foreign investment. The extant policy was silent on how much FDI could flow into digital media firms — 26% as in print news media or 49% as in news television. FDI is important for the government because it can drive economic growth and is a source of non-debt finance for the country’s economic development.

In less than a week after Finance Minister Nirmala Sitharaman announced a slew of measures to lift the sagging economy, the Union Cabinet on Wednesday unleashed FDI reforms across sectors to lure foreign investors to India.  In a fresh round of FDI reforms, the government eased the local sourcing norms for foreign investors-led single-brand retailers, allowed up to 26% FDI in digital media, and announced that 100% foreign investment will be allowed for coal mining and contract manufacturing.

Earlier, single-brand retail chains with more than 51% FDI had to source 30% of their goods from the domestic market. Now, the definition of sourcing norm has been expanded to allow companies to consider their exports from India as part of their local sourcing. Companies can now source local products for exports directly or from a group company or even a third-party firm working under legal contract with it.
Moreover, single-brand retailers are now allowed to start online sales, waiving the earlier condition of setting up a mandatory brick-and-mortar store first.

“Due to ongoing tensions in the world, companies are looking for new places to set up their manufacturing facilities. Some FDI norms were posing hurdles in attracting such entities to India. These norms have been liberalised to a great extent. We believe it will help with ease of doing business. It will boost economic growth, promote Make in India and create job opportunities,” Commerce Minister Piyush Goyal said while briefing reporters after the Cabinet meeting.

Multinational giants such as Apple, which wanted to set up a chain of stores in India but was bothered by the sourcing norms, will benefit from the new norms. India is currently engaged in a trade spat with the US and the move could help ease trade tensions between the two nations.

The government also clarified that 100% FDI is permitted in contract manufacturing. While contract manufacturers such as Foxconn, which makes iPhones for Apple, have set up shop in India, till now there was no clarity on which FDI rules applied to them.  The government also clarified that 100% FDI will be allowed in coal mining and associated infrastructure under automatic route.

Another clarification was on FDI in digital media. Goyal said digital media can have up to 26% foreign investment. The extant policy was silent on how much FDI could flow into digital media firms — 26% as in print news media or 49% as in news television. FDI is important for the government because it can drive economic growth and is a source of non-debt finance for the country’s economic development.

Among other decisions, the government announced a Rs 6,268 crore subsidy for export of 6 million tonnes of sugar during the 2019-20 marketing year, which would help sugar mills clear arrears to farmers. The decision is to help hundreds of thousands of sugarcane farmers in UP, Maharashtra and Karnataka, Information and Broadcasting Minister Prakash Javadekar said.

However, India is already under WTO glare on the issue of sugar subsidies after Australia and Brazil and Guatemala took up the issue contending India’s subsidies violate the rules of the world trade body.

Among other decisions, the government announced a Rs 6,268 crore subsidy for export of 6 million tonnes of sugar during the 2019-20 marketing year, which would help sugar mills clear arrears to farmers. The decision is to help hundreds of thousands of sugarcane farmers in UP, Maharashtra and Karnataka, Information and Broadcasting Minister Prakash Javadekar said.

However, India is already under WTO glare on the issue of sugar subsidies after Australia and Brazil and Guatemala took up the issue contending India’s subsidies violate the rules of the world trade body.