Proposal for Review of FDI Policy on Various Sectors Approved (Download PDF)

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The Union Cabinet of India has approved the proposal for Review of Foreign Direct Investment on various sectors. When an investor from a foreign country invests in a business for which the foreign investor has the direct control over the company purchased is known as Foreign Direct investment. FDI is being recognised as a powerful tool for economic progress of any country.

Image shows of The Cabinet Decided

Image Shows of The Cabinet Decided

Image shows of The Cabinet Decided

Background

  • For the economic development of any country FDI acts a source of non-debt source of Finance.

  • The govt. of India now permits 100 % FDI on the automatic route in most sectors/activities.

  • To make India an attractive investment destination FDI policies have been progressively liberalized and revised. Sector like Trading, Pharmaceuticals, Insurance, Broadcasting and Civil Aviation, Asset Reconstruction Companies, Defence etc are being progressively liberalized.

  • The reforms have contributed to India attracting record FDI inflows in the last 5 years.

  • The total amount of FDI into India from 2014 - 15 to 2018 - 19 has been US $286 billion as compared to US $189 billion in the 5-year period prior to that (2009 - 10 to 2013 - 14). The total FDI in 2018 - 19 i. e. US $64.37 billion (provisional figure) is the highest ever FDI received for any financial year.

  • Coal Mining, Contract Manufacturing, Single Brand Retail Trading (SBRT), Digital Media are some of the areas where the govt. of India is working to bring far more investments by introducing certain amendments.

  • Under approval route in Up-linking of ‘News &Current Affairs’ TV Channels, the FDI policy provides for 49 % FDI. It has also been decided to permit 26 % FDI under government route for uploading/streaming of News & Current Affairs through Digital Media, on the lines of print media.

Impacts and Benefits of FDI Policy Reform

  • The changes in FDI policy can result in making India a more attractive FDI destination. This in turn will ensure increased investments, employment and growth.

  • The permission of FDI under automatic route in contract manufacturing is expected to give a big boost to Manufacturing sector in India.

  • In the coal sector the govt. of India has decided 100 % FDI under automatic route for coal mining, activities including associated processing infrastructure. This is expected to create an effective, healthy and a competitive coal market.

  • Greater flexibility along with ease of operations for Single Brand Retail trading (SBRT) is expected to be ensured by Easing local sourcing norms for FDI in Single Brand Retail Trading (SBRT).

  • The online sales of brick and mortar stores is also expected to create jobs in logistics, digital payments, customer care, training and product skilling.

- Published/Last Modified on: September 20, 2019

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