NEW DELHI: In a historic decision, the Union Cabinet on Friday cleared 51% foreign direct investment
in multi-brand retail.
The Cabinet has also allowed FDI in aviation sector. Foreign airlines can now invest in Indian carriers.
The government also approved FDI in Broadcasting and Power Exchange.
In November last year, the same government had cleared this proposal but had to roll back the reform push following strong opposition to it from Mamata Banerjee, chief of Trinamool Congress which is a major constituent of the ruling UPA.
The government said that individual states will decide on the implementation of the move.
Earlier, when the government had okayed FDI in retail trade, it had done so with several preconditions attached to the liberalisation of the foreign investment policy regime.
The Manmohan Singh-led UPA government plans to gradually expose trade and industry to foreign investment so that the Indian industry can face this new challenge over time.
Proposals to permit FDI in multi-brand retail trading in all products, in a calibrated manner, are likely to be subject to the following conditions:
1. FDI in multi-brand retail may be permitted to the extent of 51 per cent with government approval.
2. Minimum amount to be brought in as FDI by a foreign investor would be around $100 million.
3. At least 30 per cent of the procurement of manufactured processed products shall be sourced from small industries, in the country, that have total investment in plant and machinery not exceeding $100 million.
4. The government will have the first right to procurement of agriculture products.
5. Fresh agricultural products, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meal products may be unbranded.
6. At least 50 per cent of the total FDI brought in shall be invested in back-end infrastructure. Back-end infrastructure will entail capital expenditure on all activities, excluding that on front-end units.
For instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, warehouse, agriculture market produce, infrastructure, etc.
7. This valuation refers to the value at the time of installation without providing for depreciation.
8. Further, if at any point in time, this valuation is exceeded the industry shall not qualify as a small industry for this purpose.
9. Expenditure on land cost and rental, if any, will not be counted for purposes of back-end infrastructure.
10. Self-certification will be done by the company to ensure compliance of all the conditions.
11. Retail sales locations may be set up only in cities with a population of more than 10 lakh (1 million) as per 2011 Census and may also cover an area of 10 km around municipal urban agglomeration limits of such cities.
12. Retail locations will be restricted to areas as per the master zonal plans of the cities concerned and provisions will be made for requisite facilities such as transport connectivity and parking.
The Cabinet has also allowed FDI in aviation sector. Foreign airlines can now invest in Indian carriers.
The government also approved FDI in Broadcasting and Power Exchange.
In November last year, the same government had cleared this proposal but had to roll back the reform push following strong opposition to it from Mamata Banerjee, chief of Trinamool Congress which is a major constituent of the ruling UPA.
The government said that individual states will decide on the implementation of the move.
Earlier, when the government had okayed FDI in retail trade, it had done so with several preconditions attached to the liberalisation of the foreign investment policy regime.
The Manmohan Singh-led UPA government plans to gradually expose trade and industry to foreign investment so that the Indian industry can face this new challenge over time.
Proposals to permit FDI in multi-brand retail trading in all products, in a calibrated manner, are likely to be subject to the following conditions:
1. FDI in multi-brand retail may be permitted to the extent of 51 per cent with government approval.
2. Minimum amount to be brought in as FDI by a foreign investor would be around $100 million.
3. At least 30 per cent of the procurement of manufactured processed products shall be sourced from small industries, in the country, that have total investment in plant and machinery not exceeding $100 million.
4. The government will have the first right to procurement of agriculture products.
5. Fresh agricultural products, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meal products may be unbranded.
6. At least 50 per cent of the total FDI brought in shall be invested in back-end infrastructure. Back-end infrastructure will entail capital expenditure on all activities, excluding that on front-end units.
For instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, warehouse, agriculture market produce, infrastructure, etc.
7. This valuation refers to the value at the time of installation without providing for depreciation.
8. Further, if at any point in time, this valuation is exceeded the industry shall not qualify as a small industry for this purpose.
9. Expenditure on land cost and rental, if any, will not be counted for purposes of back-end infrastructure.
10. Self-certification will be done by the company to ensure compliance of all the conditions.
11. Retail sales locations may be set up only in cities with a population of more than 10 lakh (1 million) as per 2011 Census and may also cover an area of 10 km around municipal urban agglomeration limits of such cities.
12. Retail locations will be restricted to areas as per the master zonal plans of the cities concerned and provisions will be made for requisite facilities such as transport connectivity and parking.
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