Cabinet Decisions: FDI Norms Relaxed For Single Brand Retail, Coal, Contract Manufacturing; Sugar Export Subsidy Approved

The Cabinet has eased local sourcing norms for foreign single-brand retailers.

Under the current policy, a foreign company needs to purchase at least 30 percent of the product locally.

Today, the cabinet decided that even previous sourcing done locally will be counted in the 30 percent threshold. Also, earlier it was only counted for domestic sale of products. This too has been expanded to include exports. The local sourcing norm will be considered in a block of five years.

“All procurement made from India shall be counted towards local sourcing, irrespective whether goods and sold in India or exported. Our expectation is this will lead to larger capacities,” Goyal said.

Single-brand retailers will now also be allowed to open online stores before setting up brick-and-mortar shops. They will, though, have to set it up within two years of the online sale. Currently, online sale by a single-brand retail player is allowed only after the opening of physical outlets.

Watch the press conference here:

Subsidies are compliant with the World Trade Organisation rules, so there will be no issue at an international forum, Javadekar said.

The WTO allows certain subsidies for agricultural practices till 2023, Goyal explained.

The Cabinet has also approved allowed 26 percent FDI, with government approval, for digital media in news.

In contract manufacturing, 100 percent FDI has been allowed through the automatic route, Goyal said.

In the existing foreign investment policy, 100 percent foreign direct investment is permitted in the manufacturing sector under the automatic route.

The Cabinet has approved a proposal to allow 100 percent FDI in coal mining and allied activities through the automatic route. Currently, FDI is permitted for captive coal mining only.

The Cabinet has also approved forming an international coalition on disaster management infrastructure. Prime Minister Narendra Modi will facilitate this at the upcoming United Nations meet, Javadekar said.

The cabinet has approved granting export subsidy for 60 lakh metric tonne of sugar. This will cost the exchequer Rs 6,268 crore. The subsidy will be directly transferred to the farmer’s accounts, Javadekar said.

India has a surplus stock of 162 lakh metric tonne of sugar. Of this, 40 lakh tonne is buffer stock, he added.

The Cabinet has approved a proposal to open up 75 new government medical colleges over the next three years. These will be set up where there is a dearth of such educational institutes.

In the last five years, the Modi government has set up 82 colleges, Javadekar said.

The Union Cabinet is expected to relax foreign direct investment norms in several sectors, including single-brand retail and digital media, to attract overseas players.

Commerce Minister Piyush Goyal and Information and Broadcasting Minister Prakash Javadekar is expected to address the media shortly after Wednesday's cabinet meeting.

Other sectors where FDI rules may be eased are coal mining and contract manufacturing. The government may also approve proposal to allow 100 percent FDI in contract manufacturing, sources told PTI.