Union Cabinet today cleared the bill to increase foreign direct investment to 51% in multi-brand retail and 100% in single brand. Commerce and industry minister Anand Sharma said that he would give a statement in Parliament on retail FDI. Currently, India allows 51% FDI in single brand retail and 100% FDI in cash and carry format of the business.

With Kingfisher and several other airlines landing into dire straits, the industry ministry has moved a draft Cabinet note on allowing 26% FDI by foreign airlines in the domestic carriers. Private airlines in the country are in dire need of funds for their operations and service upgradation to compete with other global carriers, the note circulated by the department of industrial policy and promotion (DIPP) said.

The government today approved amendments to the PFRDA Bill 2011 while agreeing to the proposed 26% foreign investment in the pension sector but refrained from providing assured returns to subscribers in the proposed law. The government had decided not to mention FDI cap in the legislation itself for retaining the flexibility of changing it through an executive order.

The Government of India has reviewed the extant policy on FDI and decided as under: (i) FDI, up to 100%, under the automatic route, would continue to be permitted for greenfield investments in the pharmaceuticals sector. (ii) FDI, up to 100%, would be permitted for brownfield investments (i.e. investments in existing companies), in the pharmaceuticals sector, under the Government approval route.

hri Sharma also informed that India allows 51 per cent FDI in single brand retail and government is considering the ways of raising this limit. Shri Sharma said that the micro, small and medium enterprises sector is the backbone of Indian economy, contributing 8% of our gross domestic product, 45% of manufactured output and 40% of our exports. “Earlier, the SME sector in India used to be protected and foreign investment was restricted in this sector, but recently we have liberalized this sector to enable its modernization and now the SME sector is open to foreign investment just like any other sector. We view SMEs as incubators of technology and innovation and would encourage cooperative partnerships to develop between Indian and Italian SMEs” he added.

India will continue to allow 100% Foreign Direct Investment for new ventures in the pharma sector. The decision was taken at a high level meeting chaired by Prime Minister Dr Manmohan Singh to discuss the FDI policy in drugs and pharmaceutical sector held in New Delhi last night. An official release said, the move will facilitate addition of manufacturing capacities, technology acquisition and development of the pharma sector in the country.

India now with consistent growth performance and abundant high-skilled affordable manpower provides enormous opportunity for investment both domestic and foreign. Foreign direct investment (FDI) causes a flow of money into the economies which stimulates economic activity, increases employment and induces the long run aggregate supply and brings in best practices. The FDI policy was liberalized progressively through review of the policy on an ongoing basis and allowing FDI in more industries under the automatic route.

A decision on the contentious issue of allowing foreign direct investment (FDI) in multi-brand retail is likely to be taken before the Monsoon session of Parliament, sources said. However, there will be tough riders on the global retail chains for launching their operations. These would include hand-holding the small kirana shop-keepers who fear they could be wiped out by the giant retailers.

Leading industrialist and Essar Group chairman Shashi Ruia has warned of an adverse impact on FDI inflows in India if its taxation laws with various countries remain ‘ambiguous’. The Government (of India) is signing a spate of treaties with other countries. But all this will come to nought if the treaties are ambiguous and open for departmental interpretation, he said during an address at the Indo-American Chamber of Commerce here late last evening.

Amid a debate within the government on allowing foreign direct investment in multi- brand retail, the nodal Consumer Affairs Ministry is insisting on a FDI cap of 49% in the sensitive sector, sources said.