The Union Cabinet has approved relaxation in foreign direct investment (FDI) norms for several sectors to attract foreign investors. The Cabinet in its meeting on Wednesday decided to ease foreign investment norms in coal mining and related infrastructure, contract manufacturing, single-brand retail and digital media.
"Due to ongoing tensions in the world, companies are looking for new places to set up their manufacturing facilities. Some FDI norms where posing hurdle in attracting such entities to India. These norms have been liberalised to a great extent today. We believe it will help with ease of doing business, influx of foreign investment will increase, and FDI regime will be simplified. It will also boost economic growth, promote Make in India and create job opportunities for the youth of the nation get jobs," Commerce Minister Piyush Goyal said while briefing reporters after the Cabinet meeting.
For coal manufacturing and related infrastructure, the government has decided to allow 100 per cent FDI in coal mining and contract manufacturing. The Cabinet has also approved 26 per cent foreign direct investment for digital media.
On FDI in single-brand retail, the Cabinet has expanded the definition of mandatory 30 per cent domestic sourcing norm. Earlier, companies with more than 51 per cent FDI had to source at least 30 per cent of their goods from domestic market. Single-brand retailers are now also allowed to start online sales, waiving the previous condition of setting up a mandatory brick-and-mortar store.
"The global value chains across the world today, several companies approach a large-scale manufacturer for contractual manufacturing which is cost-effective, brings economies and scale and upgrades technology. FDI norms did not allow foreign investment to such contract manufacturer so far. Now any contract manufacturer, big or small, will get 100 per cent FDI," Goyal said.
"We have decided to allow 100 per cent FDI in coal mining and related activities for its sale through automatic route. Activities including coal washing, coal crushing, coal handling, separation will attract 100 per cent FDI from now on," he further added.