New Delhi, Aug 1 (IANS): The government Thursday further liberalised its foreign direct investment (FDI) policy for multi-brand retail to lure international retailers like Walmart, Tesco and Carrefour into the country.
The decision was taken at a meeting of the federal cabinet chaired by Prime Minister Manmohan Singh.
Talking to reporters after the cabinet meeting, Commerce Minister Anand Sharma said the government has decided to relax the policies related to mandatory sourcing, investment in back-end infrastructure and selection of cities.
Regarding mandatory sourcing from the small and medium enterprises, Sharma said the $2 million investment ceiling for identification of SME was required for at the time of engagement.
As per the earlier norms, it was mandatory for the overseas investors to source at least 30 percent of goods from SME, which has investment of less than $2 million.
There was ambiguity that what will happen if the investment of SMEs crosses $2 million.
Sharma said this investment limit would be application only at the time of engagement.
The government last year had opened the gates for multi-brand retail sector to foreign investors by allowing up to 51 percent FDI.
However, no foreign investment has taken place in the sector so far. Global retailers like Walmart, Tesco and Carrefour have been demanding further clarifications in the policy.
The government has also clarified the policy related to need for mandatory 50 percent investment in back-end infrastructure.
According to the minister, the required 50 percent investment in the back-end infrastructure would of the initial investment. Later on, the companies can take investment decision based on their business requirements.
Regarding the selection of cities, Sharma said the state governments would be allowed to chose the cities where no town was eligible as per the original regulation that has the ceiling of 1 million population.
Only 53 cities in India have more than 1 million population.
Cabinet clears 100 percent FDI in telecom
The cabinet Thursday cleared 100 percent foreign direct investment (FDI) in the telecom sector, Commerce and Industry Minister Anand Sharma said here.
"There has been detailed discussion and now it has been raised to 100 percent,” he said. The decision was taken at a meeting of the Cabinet Committee on Economic Affairs.
The decision in this regard was reached July 16 after Prime Minister Manmohan Singh held an inter-ministerial meeting with senior cabinet ministers, including Finance Minister P. Chidambaram, Defence Minister A.K. Antony, Commerce and Industry Minister Anand Sharma and Telecom Minister Kapil Sibal at his official residence here.
Earlier, out of the 74 percent limit, upto 49 percent was done by automatic route and rest through the Foreign Investment Promotion Board's (FIPB) approval. Now out of 100 percent FDI, 49 percent will be done through automatic route and the rest will be done through FIPB approval route, Sharma said.
Raising the FDI limit to 100 percent will help in bringing fresh funds into the sector.
Earlier on July 2, the Telecom Commission approved 100 percent foreign direct investment (FDI) in the telecom sector.