Government allows foreign investment in retail and Aviation sector
New Delhi: Indian government on Friday allowed 51 per cent FDI in multi-brand retail, 49 per cent investment by foreign airlines in aviation sector and sale of equity in four PSUs.
The government announced the surprise decisions after meetings of the Union Cabinet as well as the Cabinet Committee on Economic Affairs (CCEA), prompting angry reactions from its key ally Trinamool Congress as well as Bharatiya Janata Party (BJP) and Left parties.
The United Progressive Alliance (UPA) government had first made an attempt to introduce FDI in multi-brand in November last year but beat a hasty retreat following stiff opposition from TMC, Samajwadi Party as well as opposition parties.
It has now decided to take the plunge within days of the conclusion of recent session of Parliament which was disrupted over coal scam.
For multi-brand retailing, a minimum investment of USD 100 million has been fixed, half of which necessarily has to be in creating storage and warehousing facilities in rural areas.
Front end retail stores would be allowed to be set up only in cities with a minimum of one million population.
However, this norm has been diluted for hilly states which have been authorised to decide on criteria for choosing big cities.
While the government had previously permitted 49 per cent in aviation sector, the Cabinet on Friday allowed foreign carriers to investment in domestic airlines. The move would help cash-strapped carriers like Kingfisher and SpiceJet to bring in strategic partners.
The CCEA also decided to permit foreign investment up to 49 per cent (FDI 26 per cent and FII 23 per cent) in power trading exchanges.
FII investment would be permitted under the automatic route and FDI under the government approval route.
Replying to questions, Sharma said the 10-month period between November last year when the government decided to first allow FDI multi-brand retailing was used for extensive consultations with all stakeholders.
“There was never a decision to rollback the decision. It was only suspended because of reservations from some states.
