FDI norms relaxed for single brand retail, digital media, and contract manufacturing

The government expects that these liberalised measures will boost the employment opportunities in the country, and aims to make India a manufacturing hub.

The government on Wednesday relaxed foreign direct investment (FDI) rule for foreign single brand retailers and also permitted foreign investment in contract manufacturing and coal mining.

Briefing reporters on the decisions taken by the Union Cabinet headed by Prime Minister Narendra Modi, Union Commerce and Industry Minister Piyush Goyal said 100 percent FDI under automatic route in coal mining and associated infrastructure has been approved.

The minister said FDI regulations have liberalised and simplified which will boost employment. He added,

“We see an opportunity to make India a manufacturing hub.”

To boost domestic manufacturing, 100 percent FDI in contract manufacturing under automatic route has been allowed, he said, adding that 26 percent FDI has been allowed in digital media.

On FDI in single brand retailing, the Cabinet has expanded the definition of mandatory 30 percent domestic sourcing norm. It also allowed single brand retailers to start online sales, waiving the previous condition of setting up a mandatory brick-and-mortar store, he said.

Under FDI in retail, companies will now be able to start online retailing before establishing a brick and mortar store, according to the minister. This is expected to benefit global furnishings company like IKEA which recently launched its online operations in Mumbai.

For single brand retail, the rules requiring 30 percent local sourcing from India has also been relaxed and this is expected to provide greater flexibility and ease of operations for the firms. 

According to the minister, online sales will also lead to creation of jobs in logistics, digital payments, customer care, training, and product skilling.

On the FDI in digital media, Jehil Thakkar, Partner Deloitte India, said, “FDI in digital media is a welcome development. Clarity around this fast growing segment of the media industry will act as an enabler for capital infusion. Significant value will be unlocked going forward.”

(Disclaimer: Additional background information has been added to this PTI copy for context)

(Edited by Dipti Nair)


Updates from around the world