‘Easier FDI norms to boost growth and employment’

Liberalisation of the foreign investment policy in over a dozen sectors will boost economic growth and create more jobs in the country, Commerce and Industry Minister Nirmala Sitharaman said on Friday. She said that the announcement of easing of FDI norms for 15 sectors reflects the government’s commitment to move ahead with the reforms agenda and it has nothing to do with the results of Bihar assembly elections.

“It (FDI reform) is an ongoing process. We keep reviewing the situation. It will keep happening. This time, we have to come up with decisions for 15 sectors... We expect this to have a major impact on the economy,” Sitharaman said. The minister said that easing of the FDI norms in sectors such as construction development would help generate more employment opportunities.

Unveiling sweeping liberalisation of foreign investment norms, the government on November 10 opened up 15 sectors including real estate, defence, civil aviation and news broadcasting in a bid to push up reforms days after BJP’s debacle in Bihar and ahead of the Prime Minister’s UK visit.

While restrictions in the construction sector were freed up by allowing overseas investors to exit and repatriate investment even before project completion, FDI up to 49 per cent stake in defence firms and regional airlines has been allowed without government nod. When asked whether these decisions have anything to do with the Bihar poll debacle, she said: “Assume Bihar elections, we could not have prepared overnight...The fact remains, not one election, not two elections, nothing in the last one year has stopped us from doing what we have committed ourselves to”.

The government is committed to bringing in reforms and “we are therefore going on with it,” she added. On the fungibility in the banking sector, she said inputs have been taken from all the stakeholders and after that the decision was taken. 

In the private banking sector, the government has introduced full fungibility of foreign investment and accordingly, FIIs/FPIs/QFIs are allowed to invest up to sectoral limit of 74 per cent, provided there is no change of control and management of the investee company. Earlier, portfolio investment was permitted up to 49 per cent. When asked about the Bhartiya Mazdoor Sangh’s (BMS) strong opposition to these announcements, she said the government is willing to speak and engage with any number of people, including BMS, on this.

“This evening, BMS is meeting. These decisions are taken keeping national interest in mind. We are not going to hurt any sector or labour,” she said adding she would explain the whole thing to the BMS. The Bhartiya Mazdoor Sangh has strongly opposed the government’s decision to allow FDI in retail and defence sectors, and wrote to Prime Minister Narendra Modi seeking the review of the decisions.

About defence sector, Sitharaman said the FIPB includes representatives of Home and Defence Ministry, “which means security issues will be taken care of”. When asked if allowing foreign wholesalers to enter single brand retail trading is an indication towards gradual movement towards permitting multi-brand retail trade, the Commerce and Industry Minister replied in negative. “...we are not supporting him (foreign wholesaler doing single brand retailing) as a multi-brander. 

“We are remaining where we are (on FDI in multi-brand)”. While FDI policy permits 51 per cent FDI in multi-brand retail trading, the ruling party BJP does not support it. 

When asked whether the FDi decisions would need cabinet approval, she said under Transaction of Business rule, the Prime Minister has given the approvals. “...but within a month, we have to go back to the Cabinet and we are ready with the Cabinet notes. So it can be taken up sooner,” she said.