An Outline Of Recent Changes In FDI Norms By The Government
For the first time in six years, India witnessed a dip in foreign direct investment equity inflows into the country. According to data released by the Department for Promotion of Industry and Internal Trade (DPITT), this decrease amounted to 1 per cent with the investment coming to a total of 44.4 billion in 2018-19.
The government has recently passed several changes across different sectors like digital media, coal mining, contract manufacturing, single brand retail trade, aviation. These reforms in foreign direct investment norms were done in order to encourage more overseas investors to invest in Indian businesses and therefore, increase FDI in India.
- Contract Manufacturing
A 100 per cent foreign direct investment was permitted in the manufacturing sector under the automatic route as per the previous FDI policy. Now, as per new changes in existing policies, a 100 per cent FDI in contract manufacturing is also permitted under the automatic route. This step is taken in with an aim of boosting domestic manufacturing.
- Coal Mining
As per new reforms in the coal mining sector, now, a 100 per cent foreign direct investment is permitted for coal mining under the automatic route. This decision was met by a lot of opposition from workers engaged in the sector. Coal unions have gone on strike which has hit the production following this announcement by the government.
- Single Brand Retail Trade
Up to 100 per cent foreign direct investment has been permitted in single brand retail trade. Earlier, overseas investments exceeding 49 per cent had to procure prior government approval and did not come under the automatic route for approval.
- Digital Media
Press Note 4 introduces a new entry of digital media and permits 26% FDI under the government approval route in entities that are engaged in uploading / streaming of news & current affairs through digital media.
The prevailing FDI Policy permits 49% FDI under the government approval route in “Up-linking of News & Current Affairs’ TV Channels and 100% FDI under the automatic route in the Up-linking of Non- News & Current Affairs’ TV Channels/ Down linking of TV Channels”.