The Union Cabinet chaired by the Prime Minister Shri Narendra Modi on 28th August 2019 approved the proposal for Review of Foreign Direct Investment on various sectors.
Major Impact and Benefits from FDI Policy Reform
The changes in FDI policy will result in making India a more attractive FDI destination, leading to benefits of increased investments, employment and growth.
In the coal sector, for sale of coal, 100% FDI under automatic route for coal mining,activities including associated processing infrastructure will attract international players to create an efficient and competitive coal market.
Further, manufacturing through contract contributes equally to the objective of Make in India. FDI now being permitted under automatic route in contract manufacturing will be a big boost to Manufacturing sector in India.
Easing local sourcing norms for FDI in Single Brand Retail Trading (SBRT) was announced in Union Budget Speech of Finance Minister. This will lead to greater flexibility and ease of operations for SBRT entities, besides creating a level playing field for companies with higher exports in a base year. In addition, permitting online sales prior to opening of brick and mortar stores brings policy in sync with current market practices. Online sales will also lead to creation of jobs in logistics, digital payments, customer care, training and product skilling.
The above amendments to the FDI Policy are meant to liberalize and simplify the FDI policy to provide ease of doing business in the country, leading to larger FDI inflows and thereby contributing to growth of investment, income and employment.
Sectors impacted are - coal mining, digital media, single brand retail trading & contract manufacturing