Govt considers relaxing sectoral restrictions to attract FDI

In June 2016, govt had lifted FDI restrictions in some sectors, such as food processing, civil aviation, defence, etc.

The Dollar Business Bureau 

In order to attract more foreign investment into the country, the government is considering to relax the sectoral restrictions in sectors such as retail trading for international players.

The ministry of commerce and industry is likely to have discussions regarding sector specific issues with the concerned departments and ministries, according to some sources. In the retail trading segment, there are a few clauses in Legal Metrology (Packaged Commodities) Rules, 2011, which are hampering foreign investments in the sector, they said.

According to these norms, mentioning maximum retail price (MRP) on all the items is mandatory and re-labeling of products is also not permitted as it comes under the manufacturing definition.

On imported products, MRP can only be fixed in a bonded space and this rule enhances the transaction cost for an international player.

Earlier, in November 2015, the government had eased the Foreign Direct Investment (FDI) policy. In June 2016, the government had lifted specific restrictions in some sectors, such as food processing, civil aviation, defence and pharmaceuticals.

Ramesh Abhishek, DIPP Secretary, has recently said that the government is considering addressing certain policy issues in several sectors.

“The government has identified a number of sectors that remain in FDI policy despite liberalisation. There could still be issues in several segments,” he said.

In 2015-16, the FDI in India grew 29% to $40 billion.

The Dollar Business Bureau - Oct 29, 2016 12:00 IST