Ahead of the Union Budget 2017-18, the Cabinet has approved 100% FDI through the automatic route in single brand retail. Up until now, foreign direct investment of up to 49% was permitted under the automatic route. Beyond that, government permission was required.
As per the current regulatory framework, to facilitate foreign investments, the company’s products need to fall under a single brand and are required to be sold under the same brand globally.
Welcoming the move, Kumar Rajagopalan, CEO of Retailers Association of India (RAI) told Inc42, “We at the Retailers Association of India (RAI) have always been supportive of relaxation of norms for FDI in retail. We believe that the current decision to allow 100% FDI through automatic route will ease the process for foreign as well Indian brands interested in being part of the Great Indian Retail Story.
“It is known that global companies take time to develop good suppliers as partners and hence the relaxed time frame for sourcing is conducive without compromising India’s need to be a good sourcing hub for global brands. In the long run, today’s reform would help boost employment, bring in wide product choices for consumers and help grow not just the economy, but the nation as a whole,” Kumar added.
During a PM Narendra Modi-chaired meeting earlier today, the Union Cabinet reviewed the FDI norms across multiple sectors. In a bid to attract more overseas investment and facilitate job creation, it has also decided to allow foreign airlines to invest up to 49% through the “approval route” in government-owned carrier Air India.
As part of the meeting today, the Cabinet also gave its approval to allow foreign institutional investors (FIIs)/foreign portfolio investors (FPIs) to invest in power exchanges through the primary market.