In a major boost for development Union Cabinet meeting chaired by Prime Minister has given nod for inculcating 100% Foreign Direct Investment in food retail market through Government approved routes. “But there is no mention of any conditions for the investment, as many a time suggested”, said Minster of Food and Processing Industry Harsimrat Kaur Badal.
According to the decision taken by the Union Cabinet, the government which has been mulling over the policy with respect to foreign direct investment(FDI) in food retail has decided to allow 100% FDI under Government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India.
But there is no mention of the 15% of the investment or part of the investments to be invest at the farm-gate, as desired by the MoFPI minister. A senior official with the DIPP when contacted says that the policy which has been announced on Monday remains final, which has no mention of any additional conditions for the investment. And therefore questions are being raised as what will happen to all those desires of strengthening of infrastructure for the food sector. A decision in this regard was announced by the government in this year's budget speech.
The union government says that Government has radically liberalized the FDI regime, with the objective of providing major impetus to employment and job creation in India. The decision was taken at a high-level meeting chaired by Prime Minister Narendra Modi. This is the second major reform after the last radical changes announced in November 2015. Now most of the sectors would be under automatic approval route, except a small negative list. With these changes, India is now the most open economy in the world for FDI.
In last two years, Government has brought major FDI policy reforms in a number of sectors viz. Defence, Construction Development, Insurance, Pension Sector, Broadcasting Sector, Tea, Coffee, Rubber, Cardamom, Palm Oil Tree and Olive Oil Tree Plantations, Single Brand Retail Trading, Manufacturing Sector, Limited Liability Partnerships.
Measures undertaken by the Government have resulted in increased FDI inflows at US$ 55.46 billion in financial year 2015-16, as against US$ 36.04 billion during the financial year 2013-14. This is the highest ever FDI inflow for a particular financial year. However, it is felt that the country has potential to attract far more foreign investment which can be achieved by further liberalizing and simplifying the FDI regime. India, today, has been rated as Number 1 FDI Investment Destination by several International Agencies.
Accordingly the Government has decided to introduce a number of amendments in the FDI Policy. Changes introduced in the policy include increase in sectoral caps, bringing more activities under automatic route and easing of conditionalities for foreign investment. These amendments seek to further simplify the regulations governing FDI in the country and make India an attractive destination for foreign investors, says the statement.
As per FDI Policy 2016, FDI in Pisciculture and Aquaculture was allowed 100% under automatic route under ‘controlled conditions.’ However, with yesterday’s announcement it has been decided to do away with this requirement of ‘controlled conditions’ for FDI in these activities.