Government liberalizing pattern for FDI reforms

By Gautam Khaitan and Arihant Jain, OP Khaitan & Co
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The government of India is further liberalizing its foreign direct investment (FDI) policies in various sectors in an attempt to thwart what is being called a trend of “economic policy paralysis”. The measures are also aimed at turning around declining investor sentiment and boosting the flow of foreign funds in light of the rupee’s depreciation against the US dollar.

In a press note dated 22 August, the Department of Industrial Policy and Promotion raised FDI limits and relaxed rules on approvals in key sectors including retail, civil aviation, defence, telecoms, insurance, commodity exchanges, power exchanges and broadcasting.

Changes in norms

Under the revised FDI guidelines, the government has relaxed norms for multi-brand retail trading and eased the mandatory 30% local sourcing norms for investors. States can also permit multi-brand retail outlets to be set up in cities with a population of less than 1 million. Further, FDI in single-brand retail trade is now approved up to 49% under the automatic route and up to 100% may be allowed after approval.

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OP Khaitan & Co is a 40-lawyer law firm, based in New Delhi. Gautam Khaitan is the firm’s managing partner and Arihant Jain is a junior partner.

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Email: gkhaitan@opkhaitan.com

arihant@opkhaitan.com

Website: www.opkhaitan.com

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