100% FDI in retail will harm retailers, shopkeepers: CPI-M

100% FDI in retail will harm retailers, shopkeepers: CPI-M

As per the existing policy, foreign investment up to 100 per cent was allowed for scheduled and non-scheduled operators and foreign airlines could invest up to a limit of 49 per cent of their paid up capital.

In a significant decision, the Union Cabinet on Wednesday approved 100% foreign investment in single brand retail trading and construction development and chose to open up Air India for FDI up to 49%.

Currently, foreign investment of up to 100 per cent is allowed in Indian airlines, with a ceiling of 49 percent on holding by foreign airlines.

Under the automatic route, no approval would be required from Reserve Bank of India or central government for investment.

At present, the Air India Maharaja has a debt burden of more than Rs 52,000 crore.

The government has appointed EY to advise it on the privatization exercise, in which the invitation seeking expressions of interest from would-be bidders is the first step.

"It is a major reform and national economic policy decision-not just limited to aviation".

"We had allowed 49% in private airlines. See 4-6 serious bids for Air India subject to bid conditions", CAPA South Asia CEO and Director Kapil Kaul said in a statement.

Describing Air India as a lovely airline with terrible finances, Civil Aviation Minister Ashok Gajapathi Raju said that professional management can help revive the airline. Turkey's Celebi Aviation Holding, Bird Group, Menzies Aviation Plc. and Livewel Aviation Services Pvt.

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"Now Air India is on par with other Indian airline operators with respect to FDI norms".

The government said the latest amendments are "intended to liberalise and simplify the FDI policy so as to provide ease of doing business in the country".

This measure indicates that the Modi government is moving towards allowing FDI in multi-brand retail trade, it claimed.

The Union Cabinet on Wednesday cleared 49 percent investment through FDI route in Air India.

The cabinet eased the local sourcing rule for foreign single-brand retailers; for five years, such entities are not required to meet the 30% target for local sourcing by their Indian units if they are already doing so for their global operations, it said. The government is considering raising the ceiling for single-player foreign investment from 5% to 15%, industry sources said.

"Whether it also allows foreign carriers (to invest), which presumably is the case, then it raises some fundamental questions", Sharma said.

However, FII/FPI (foreign portfolio investors) purchases were restricted to secondary market only.

Speaking on real-estate sector, the government said: "It has been made a decision to clarify that real-estate broking service does not amount to real estate business and is therefore, eligible for 100% FDI under automatic route".

Relaxing a procedural requirement, the government said it has now been decided that for investments in automatic route sectors, requiring approval only on the matter of investment being from country of concern (that is Pakistan and Bangladesh), FDI applications would be processed by the DIPP for government nod.

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