New Delhi: Putting its economic liberalisation agenda on the fast track, India on June 20 relaxed its foreign equity norms further, notably in defence, aviation, pharmaceuticals and retailing, with automatic approval rather than a case-based route as the preferred model.
In aviation, extant policy allowed up to 49 per cent foreign equity in scheduled airlines under the automatic route. Now, while the cap has been raised to 100 per cent, up to 49 per cent would be under automatic and beyond that will be under the government approval routes, officials said.
Then in pharmaceuticals, both greenfield and brownfield projects could get 100 per cent foreign capital, but with an automatic route for the former and government route for the latter. Now, brownfield projects, too, will come under automatic route for up to 74 per cent.
In defence manufacturing, the 49 per cent norm under automatic approval will continue. But while looking at the proposals that call for investment beyond 49 per cent, a condition that they will bring with them access to “state-of-the-art” technology has been done away with.
“The Union Government has radically liberalized the foreign direct investment regime today, with the objective of providing major impetus to employment and job creation,” an official statement said.
“The decision was taken at a high-level meeting chaired by Prime Minister Narendra Modi. This is the second major reform after the last radical changes announced in November 2015. Now most of the sectors would be under automatic approval route, except a small negative list,” it said.
“With these changes, India is now the most open economy in the world for foreign investment.”
Commerce and Industry Minister Nirmala Sitharaman told reporters later that the steps taken on Monday were in line with the idea of making India a preferred destination for industry with a focus on employment. She said investments shall be encouraged so that more jobs can be created. (Agencies)