DNA Money Edit: India woos foreign cos with new norms
The move should generate employment and give Indian consumers access to several international brands
With an eye on higher foreign inflows, the government has liberalised the foreign direct investment (FDI) policy in various sectors such as single-brand retail, real estate broking and civil aviation. Foreign single-brand retail companies can set up operations without any time lag, thanks to the nod for 100% FDI under the automatic route.
Allowing incremental sourcing undertaken by overseas companies to be counted towards the 30% sourcing commitment for the initial five years will provide them with the flexibility and time to align their retail and sourcing business in India.
The move should generate employment and give Indian consumers access to several international brands. However, the government has yet to liberalise norms for multi-brand retail to enable large international retail chains to invest and bring latest technologies to India. It remains an unfinished agenda for the government.
Opening up of FDI for real estate brokers will surely help the sector in India. Similarly, with the government relaxing norms for Air India, foreign airlines can now invest up to 49% under approval route in the sale-bound Indian carrier. The development is expected to clear the way for foreign airlines and Indian carriers to get into tie-ups to jointly invest in Air India.