With the economy seeming sluggish, the Union government may approve proposal to allow 100 per cent FDI in contract manufacturing, said reports. The Union Cabinet meeting will be held today and the proposal to relax norms in single-brand retail trade and insurance sectors is said to be on the cards. Other sectors where FDI rules would be eased are coal mining and contract manufacturing.
Commerce and Industry Minister Piyush Goyal had earlier said that the government was exploring ways to allow foreign investors in single-brand retail to meet their 30 per cent mandatory local sourcing requirement through other ways.
With the economy seeming sluggish, the Union government may approve proposal to allow 100 per cent FDI in contract manufacturing, said reports. The Union Cabinet meeting will be held today and the proposal to relax norms in single-brand retail trade and insurance sectors is said to be on the cards.
In the existing foreign investment policy, 100 per cent foreign direct investment is permitted in the manufacturing sector under the automatic route. A manufacturer is also allowed to sell products manufactured in India through wholesale and retail channels, including through e-commerce, without the government’s approval. But, the policy does not talk about contract manufacturing and it is not clearly defined in the policy. The present FDI policy is silent on the fast-growing digital media segment.
In the print media sector, 26 per cent FDI is allowed through government approval route. Similarly, 49 per cent is permitted in broadcasting content services through government approval route. In the single-brand retail sector, the Cabinet will consider a proposal of relaxing rules for complying with the mandatory 30 per cent local sourcing norms by foreign single-brand retailers.
As per the proposal, single-brand retail firms would also be permitted to open online stores before setting up brick-and-mortar shops. Currently, online sale by a single-brand retail player is allowed only after the opening of physical outlets. Relaxations are expected in a provision where foreign retail traders are presently allowed to adjust procurement of goods from India for their global operations for meeting the mandatory local sourcing requirement.