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ALL INDIA RADIO- 12TH NOVEMBER 2015

  • November 14, 2015
  • 1
All India Radio
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INCREASE IN FDI CAPS


Click here for audio. The following summary is completely factual. This might be useful in mains exam. Quoting few important facts and figures in your answer, if at all you can remember, gives you comparative advantage over others.

 

Recently Government of India liberalized caps in FDI in 15 sectors.

Objective

  • To ease, rationalize and simplify the process of foreign investments
  • To put more FDI proposals under automatic route

Few highlights for the exam

Limit for approval by Foreign Investment Promotion Board raised to 5,000 crores (earlier it was 3,000 crores). Beyond that, Cabinet Committee on Economic Affairs will take up.

Defence

  • FDI in automatic route up to 49% is allowed. Beyond that, FIPB approval needed.
  • Earlier also, FDI beyond 49% was there. But approval from Cabinet Committee on Security is required.
  • India is the largest importer of defence equipment in the world.
  • Increase in defence FDI boosts Make in India and manufacture of technology in India.
  • More joint ventures will come up

Construction

  • There was 100% FDI in construction sector earlier. But several restrictions and implementation bottlenecks were there.
  • Earlier there was a lock-in period for foreign investors. Before the completion of project, the foreign investor cannot withdraw investment.
  • Now, they can leave at any phase of the project. However, a cap of 3 years was put. Several other restrictions were removed.
  • Construction has huge capacity to create employment in the country.
  • This helps build 50 million affordable housing for the poor

Aviation

  • 49% FDI under automatic route will be allowed for regional air transport service.
  • At present, FDI is allowed for scheduled air transport services only.

Broadcasting

  • 100% FDI allowed in non-news channel.
  • World class exposure to Indian journalists and employment opportunities.

Plantation

  • 100% FDI in plantation (Coffee, tea, rubber etc)
  • India is the net importer of edible oil. Hence, this FDI is very much needed.
  • 40% world’s share in palm olive oil is that of Indonesia and another 40% is that of Malaysia.
  • In tea exports, India has lost ground to Sri Lanka, Vietnam, Tanzania, Kenya etc.
  • Concerns are: land expansion for cultivation; logistics for transport and distribution

E-Commerce

  • Manufacturers can now sell their products through wholesale/retail via e-commerce without govt approval.

Facts and Figures

  • India’s latest Ease of Doing Business rank:130th; China: 84; US: 7;
  • India’s Competitiveness Index rank: 55; China: 28
  • IMF: “India is the brightest spot in the global economy

For more information on this, read this The Hindu article.

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