Cabinet approves 100% FDI in retail, construction

Representational image

Representational image

The Union Cabinet on Wednesday approved 100 per cent foreign direct investment (FDI) in single-brand retail and construction through the automatic route.

The FDI in real estates has been increased to 100%.

The government said the latest amendments are "intended to liberalise and simplify the FDI policy so as to provide ease of doing business in the country". The foreign airlines can invest in Air India only up to 49% in all routes.

Stocks like Indian Terrain, Monte Carlo and Zodiac Clothing rallied 5-8 percent after finally the Cabinet has approved 100 percent foreign direct investment in single-brand retail that had been pending for long.

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Besides, 49% FDI has now been allowed directly for power exchanges as well.

For investments in automatic route sectors, FDI applications will be processed by the Department of Industrial Policy and Promotion.

"Foreign investment (s) in Air India including that of foreign Airline (s) shall not exceed 49 per cent either directly or indirectly". However, FII/FPI purchases were restricted to secondary market only. In the pharma sector, the Cabinet chose to amend the definition of medical devices in the FDI policy. The Cabinet also decided to make changes relating to competent authority for examining FDI proposals from countries of concern. Beyond that limit, an approval from the government is required. Thus, we can expect some foreign investors backing real estate brokerage firms now, thereby inciting new growth in the sector.

The earlier FDI policy allowed foreign carriers to own 49 per cent in Indian carriers, but had kept Air India out of it, which has been amended by the Cabinet now.

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