In a significant decision, the Union Cabinet on Wednesday approved 100% foreign investment in single brand retail trading and construction development and decided to open up Air India for FDI up to 49%.
The government also decided that foreign institution investors and portfolio investors be allowed to invest in power exchanges through primary market and amended the definition of "medical devices" in its FDI policy.
These decisions, taken at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi, are expected to liberalize and simplify the FDI policy to provide ease of doing business. "In turn, it will lead to larger FDI inflows contributing to growth of investment, income and employment," said an official statement.
The present FDI policy on single brand retail trading allows only 49% FDI under automatic route and FDI beyond 49% and up to 100% through government approval route.
"It has now been decided to permit 100% FDI under automatic route. It has been decided to permit single brand retail trading entity to set off its incremental sourcing of goods from India for global operations during initial five years, beginning April 1 of the year of the opening of first store against the mandatory sourcing requirement of 30% of purchases from India," the statement said.
The Confederation of All India Traders (CAIT) has strongly opposed the move. Condemning the decision, CAIT Secretary General Praveen Khandelwal said the move would facilitate easy entry of MNCs in retail trade and leave a large number of people jobless. He said in a statement that the CAIT would soon declare a nationwide strategy to oppose the "brutal move" by the government.