BJP-led Indian government on Tuesday announced plans for a sweeping liberalisation of its foreign direct investment (FDI) regime, as Prime Minister Narendra Modi seeks to counter accusations his reform drive is stalling.
The government said it would undertake a raft of reforms to open up 15 areas of the economy, including lifting the caps on FDI in the broadcasting and air transport sectors.
The government said the reforms were aimed at making it easier for overseas companies to do business in India, notorious for its red tape and labyrinthine regulations.
“This exercise... is intended on the one hand to further open up sectors for more foreign investments in the country and also to make it easy to invest in India,” the commerce ministry said in a statement.
While 100% percent foreign direct investment (FDI) has been allowed in direct-to-home (DTH), cable network and plantation crop, overseas investment limit in uplinking of news and current affairs TV channels has been raised to 49% from 26%, Indian Finance Minister Arun Jaitley said.
The government has also relaxed conditions for FDI in single-brand retail and allowed 100% FDI under automatic route in duty-free shops and Limited Liability Partnerships (LLP) and eased foreign investment norms in the defence sector.
It has also raised the Indian Foreign Investment Promotion Board’s monetary limit to Rs5,000cr from Rs3,000cr for approving FDI proposals. India got foreign direct investment worth of $19.39bn in the April-June quarter, according to government data, which is 29.5% more than that received in the same period last year.
The reforms come after Modi’s Bharatiya Janata Party suffered a drubbing in state elections in Bihar, in a battle fought largely over development in India’s poorest state.
They also appear to be a signal of intent ahead of the prime minister’s first visit to Britain as leader later this week, where he will be seeking investment from the former colonial power.
Modi stormed to power in 2014 promising sweeping reforms to revive the faltering economy.
Growth is now chugging along at 7%, putting India among the fastest-growing of the G20 nations.
But complaints have been mounting about the Indian leader’s failure to nail down major reforms to boost investment and help create jobs for India’s tens of millions of young people.