Cabinet eases norms for FDI in retail, allows 26% in digital media

New Delhi: The Union Cabinet on Wednesday liberalised Foreign Direct Investment (FDI) rules in four sectors, including single-brand retail trade and digital media, to boost investment in the private sector.

Union Commerce minister Piyush Goyal said the Union Cabinet, at its meeting chaired by Prime Minister Narendra Modi, has decided to allow 100 percent FDI under the automatic route for coal mining and contract manufacturing, eased sourcing norms for single-brand retailers and approved 26 per cent overseas investment in digital media as it looked to boost economic growth from a five-year low.

An official statement said the decision has been taken to in order to provide clarity on contract manufacturing in the country. "Subject to the provisions of the FDI policy, foreign investment in 'manufacturing' sector is under automatic route. Manufacturing activities may be conducted either by the investee entity or through contract manufacturing in India under a legally tenable contract, whether on 'Principal to Principal' or 'Principal to Agent' basis," the Commerce minister's statement said.

The Narendra Modi Cabinet also eased the 30 per cent local sourcing norm in Single-Brand Retail (SBRT) where domestic procurement for exported goods will now qualify for inclusion under the 30 per cent sourcing rules. "With a view to provide greater flexibility and ease of operations to SBRT entities, it has been decided that all procurements made from India by the SBRT entity for that single brand shall be counted towards local sourcing, irrespective of whether the goods procured are sold in India or exported," Goyal said after the meeting.

"Further, the current cap of considering exports for 5 years only is proposed to be removed, to give an impetus to exports," he added. The extant FDI policy provides that 30 per cent of the value of goods have to be procured from India if the SBRT entity has more than 51 per cent FDI. Besides, the local sourcing requirement can be met as an average during the first five years, and, thereafter, annually.

In a significant boost for the fast-growing digital media space, the Cabinet approved 26 per cent FDI in digital media with government approval.

Currently, 49 per cent FDI is provided under the approval route in news channels and the government has now decided to expand the span of FDI to the digital media space.

"The extant FDI policy provides for 49 per cent FDI under approval route in up-linking of 'News & Current Affairs' TV channels. It has been decided to permit 26 per cent FDI under government route for uploading or streaming of news and current affairs through digital media, on the lines of print media," an official statement said.