Inter-Ministerial Group Discusses Possibility Of Further Easing FDI Policy
An Indian two thousand rupee banknote is arranged for a photograph in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Inter-Ministerial Group Discusses Possibility Of Further Easing FDI Policy


An inter-ministerial group on Tuesday held discussions on the possibility of further easing foreign direct investment norms in different sectors with a view to attract overseas investors, an official said.

The meeting was chaired by the Department for Promotion of Industry and Internal Trade Secretary Guruprasad Mohapatra. Officials from different ministries, including defense, Home affairs, information and broadcasting, electronics and IT, and finance, attended the meeting, the official said.

The department is looking at relaxing norms in those sectors where currently 100 percent FDI is not permitted through automatic route. Foreign investment is allowed through automatic route in most of the sectors, but in certain areas such as defence, telecom, media, pharmaceuticals, and insurance, government approval is required. In some sectors like telecom, insurance, banking, and media, there is a cap on the FDI limit.

"Basic target is those sectors, where there is a government approval route and 100 percent FDI is not there," the official said.

Under the government route, the foreign investor has to take prior approval of the respective ministry. Through the automatic approval route, the investor just has to inform the RBI after the investment is made.

There are nine sectors where FDI is prohibited and that includes lottery business, gambling and betting, chit funds, Nidhi company, real estate business, and manufacturing of cigars, cheroots, cigarillos and cigarettes using tobacco.

Recently, the government relaxed FDI norms in several sectors like single-brand retail trading, contract manufacturing, and coal mining. Finance Minister Nirmala Sitharaman in her Budget speech in July had proposed relaxation in the FDI norms for certain sectors such as aviation, animation, visual effects, gaming, and comics, insurance, and single-brand retail.

Currently, a standard operating procedure is laid out by the DPIIT through which foreign direct investment proposals are processed within a fixed time period of 8-10 weeks. During the April-June period of the current fiscal, FDI into India increased by 28 percent to $ 16.33 billion.

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