New Delhi: The decision to relax FDI norms in sectors like single brand retail would lead to further increase in foreign investment inflows, industry body CII on Wednesday said.
Chandrajit Banerjee, Director General, CII said: “India continues to attract high levels of foreign direct investment. Today’s announcement includes multiple measures targeted at specific sectors where opportunities exist”.
He also said that the decision to permit foreign airlines to invest up to 49 per cent in Air India is expected to bring some capital to support a turnaround in the national carrier.
In big bang FDI reforms ahead of the Budget, the government on Wednesday permitted foreign airlines to invest up to 49 per cent in debt-ridden Air India, and eased norms for investment in single brand retail, construction and power exchanges.
In a separate statement, Rajat Wahi, Partner, Deloitte India, said the move will not only attract additional foreign capital, but will also provide an impetus to the retail industry growth, at a time when organised and retail sector is already seeing a strong growth over the last 12 months.
“Global brands across different categories, from apparel to electronics to accessories will be aided through this, providing further options to Indian consumers and improving India’s ranking in ease of doing business,” he added.
Commenting on the relaxations made in the single brand retail trading sector, Shardul Amarchand Mangaldas Partner Akila Agrawal said that the government has further relaxed the local sourcing norm for India operations.
“Now, it is applicable only after five years from commencement. For the first five years, the norm could be satisfied by incremental local sourcing for global operations of the investee company or its affiliates, i.e. increased purchases from India over and above the previous year will be adjusted against the 30 per cent local sourcing condition,” he said in a statement.
However, he added, that it is unclear if this determination will be done at the end of five years on an average basis or each year from the date of commencement.