FDI

FDI 

India FDI Policy

India FDI Policy

FDI in Retail - Report

FDI in Retail - Report

FDI in Retail - India

FDI in Retail - India

Govt opens door to foreign retailers...Approves 51% FDI in multi-brand retail

The Union Cabinet on Thursday approved a proposal to allow foreign giants like Wal-Mart to enter multi-brand retail in the country. But the Centre’s move has drawn criticism from various opposition parties. In fact, even UPA allies like Trinamool Congress and DMK are apparently against the decision. In this context, Friday’s parliament session will be interesting after three days of near wash-out. The Cabinet has cleared up to 51% foreign direct investment (FDI) in multi-brand retail, and up to 100% FDI in single brand retail. At present, the Government allows up to 51% FDI in single brand retail, up to 100% in cash and carry (wholesale) business. FDI is not allowed in multi-brand retail currently. The Finance Ministry reportedly gave its consent to the draft Cabinet note on opening the multi-brand retail to foreign investment. The Department of Industrial Policy and Promotion (DIPP) had earlier circulated a draft Cabinet note to seek inter-ministerial views on the issue. Shares of retail companies like Pantaloon Retail, Provogue India and Shoppers Stop rose are yesterday on reports that the Union Cabinet will take up a proposal on allowing FDI in multi-brand retail besides considering increasing the FDI limit in single brand retail. The policy will allow foreign retailers to set up shop only in cities with a population of more than 10 lakh as per the 2011 Census. There are 55 such cities in India currently. Foreign investors will be required to invest up 50% of total FDI in back-end infrastructure, excluding the land cost and rentals. Retailers will need to source at least 30% of manufactured/processed products from small industries, excluding agricultural items. The Government has also retained the first right on sourcing agricultural produce. In terms of single-brand retail, the Government has made 30% sourcing from SMEs mandatory once the FDI limit exceeds 51%.

DIPP floats discussion paper on FDI in multi-brand retail

Looks like the UPA is keen on pushing through key reforms that had been pushed to the backburner during the Congress-led coalition's previous five-year rule owing to stiff opposition from allies like the Left parties. Hot on the heels of announcing a partial deregulation in fuel prices, the Centre is now contemplating opening up the retail sector. The Department of Industrial Policy and Promotion (DIPP), which falls under the Commerce & Industry Ministry, is seeking comments from various stakeholders on whether FDI in multi-brand retail should be allowed or not. The paper, however, remains silent on the quantum of FDI cap. The draft paper had proposed 51% FDI in multi-brand retail.

"FDI in retail may be an efficient means of addressing the concerns of farmers and consumers. Opening FDI in retail could also assist in bringing technical know-how to set up efficient supply chains, which can act as models of development," the DIPP said in a discussion paper. "It would also assist in lowering consumer prices/inflation," the paper said. The Commerce Ministry has sought comments by July 31.

At present, FDI in multi-brand retail is banned in India. However, the Government allows 51% FDI in single brand retailing and 100% in wholesale trade. A financial newspaper reported last week that the DIPP has sought the views of the Finance Ministry and the Department of Consumer Affairs for amendments to the guidelines for FDI in wholesale trading.

Govt approves 26 FDI proposals worth Rs13.6bn

The Government deferred a proposal by Jet Airways to raise US$400mn. The airline had planned to raise the funds from FIIs as the appetite for domestic investment in the aviation sector in India is not that strong. The Centre approved 26 proposals of Foreign Direct Investment (FDI) amounting to Rs13.61bn approximately based on the recommendations of the Foreign Investment Promotion Board (FIPB) in its meeting held on October 9. In total, 14 proposals were deferred. A plan by Opto Circuits (India) Ltd., Bangalore to issue Convertible Warrants on a preferential basis was also put on hold. UTV Software Communication Ltd.'s proposal to issue and allot equity shares pursuant to the Scheme of Arrangement approved by the Bombay High Court was also deferred. The proposed Joint Venture between EADS Deutchland GmbH (EADS), Germany and Larsen & Toubro Ltd. (L&T), Mumbai was rejected yet again. The two companies plan to incorporate a manufacturing JV company to undertake the production of defence equipment. Four proposals were rejected, including that of ByCell Telecommunication Pvt. Ltd. One proposal has been advised to access automatic route.

July FDI jumps 55% yoy

For the first time in more than one year, foreign direct investment (FDI) crossed the US$3bn mark on a monthly basis. Total FDI inflows amounted to US$3.48bn in July, up 55% from US$2.25bn a year ago. Cumulative inflows from April-July 2009-10, despite being lower at US$10.5bn compared with US$12.3bn in the year-ago period, were marginally higher than inflows through the portfolio route, which amounted to US$10.35bn over the same period. India in a way did better than China, which witnessed a dip in FDI inflows. In July, China saw FDI plunge 35.7% to US$5.36bn, though in absolute terms, it annually receives far higher FDI than India. The government has scaled down its FDI target for FY10 by US$5bn to US$30bn.

Separately, the Union Government, along with industry body Federation of Indian Chambers of Commerce & Industry (FICCI) is to set up a not-for-profit company dubbed Invest India to facilitate the flow of foreign investment into the country. Invest India will be the first point for FDI into the country, Commerce & Industry Minister Anand Sharma said.

Parliament panel seeks ban on corporates in retail

The Parliamentary Standing Committee, headed by BJP leader Murli Manohar Joshi, has recommended a blanket ban on foreign direct investment (FDI) in retail. The 42-member panel has also opposed the entry of large domestic corporates in the retail trading of groceries, fruits and vegetables. It has also opposed building of large shopping malls to sell these products. The report presented by the committee avers that restrictions should be put for opening large malls by corporates for selling groceries, fruits, vegetables and other consumer products, which would thereby result in unemployment as the business of the neighbourhood kirana stores will be affected. The panel said that modern retailers would lead to job losses and force small stores out of business. According to the proposed report, the Government should stop issuing more licensees to MNC retailers or their joint ventures with local partners, for Cash and Carry stores, as it amounts to a back-door entry into the retail trade. Organized retailers account for just around 5% of India’s US$350bn retail sector. The report was tabled in the Rajya Sabha.

India bullish on FDI

Undeterred by global credit freeze, India maintains a bullish outlook on attracting Foreign Direct Investment which may be governed by easier rules, a top government official said on Wednesday.

"FDI inflows were robust till September and...my sense is that the October figures will be robust as companies like the General Motors, Volkswagen and Toyota are going to execute their ongoing projects," Department of Industrial Policy and Promotion (DIPP) Secretary Ajay Shankar said here.

He said the issue of "liberalisation and rationalisation" of FDI policy was under inter-ministerial consultation. "A decision is expected soon", he said at a FICCI function here.

An empowered Group of Ministers, headed by External Affairs Minister Pranab Mukherjee, is likely to meet soon to discuss a proposal to exclude foreign institutional investors' stake from the overall FDI ceiling.

Despite slowdown in the global economy, India received 17.21 billion dollar between April-September this financial year, showing an impressive increase of 137 per cent from 7.25 billion dollar in the first half of the previous fiscal.

While the DIPP is understood to have mooted the proposal for excluding the foreign institutional investors' stake in companies from the overall FDI ceiling, the plan is believed to have been opposed by the Finance Ministry and the Ministry of Corporate Affairs. The issue will be resolved by eGoM.

Between April-August, data for which has been officially released, manufacturing has attracted an FDI of five billion dollar, showing an increase of 41 per cent over inflows in the year-ago period.

Asked whether the government is mulling import restrictions to protect the domestic industry, Shankar said both fiscal and monetary measures would be used to stimulate demand and maintain growth.

FDI in Media to be increased

Issue to be discussed with the PM and FinMin before the budget

On 2 January 2008, Union Minister for Information and Broadcasting informed in an interactive session organised by the Indian Chamber of Commerce on the challenges and prospects of liberalisation in the media, that discussions are on about a further increase in foreign direct investment in the media.

Dasmunsi also informed that the issue would be discussed with the Prime Minister and the Finance Minister before the budget. He added that there was pressure from big media houses to relax the present 26% cap on foreign equity, but a sudden jump could not be made without due caution or without ensuring a level-playing field for smaller players.

Govt approves FDI proposals

The government today gave its approval for 19 foreign direct investment proposals amounting to Rs 726.88 crore, which include Global Broadcast News Ltd's proposal to sell 26 per cent stake for Rs 500 crore. GBN is a part of media group Network 18.

The proposal of Cyprus-based Dunbay to acquire additional 5 per cent stake in Delhi Stock Exchange for Rs 10.61 crore has also been approved.

"The Finance Minister approved 19 FDI proposals recommended by the Foreign Investment Promotion Board (FIPB) in its meeting held on December 14," said a Finance Ministry statement here.

GBN has proposed to induct up to 26 per cent FDI worth Rs 500 crore, including investment by foreign institutional investors (FIIs).

The broadcaster, which runs English news channel CNN-IBN, had raised around Rs 105 crore from the capital market with an initial public offer (IPO) early this year.

The company has also announced to set up a joint venture with Jagran Group to bring out a business newspaper in Hindi language.

The government also gave its approval to the UK based- Middlebrough Oils to invest Rs 200 crore to set up a subsidiary to undertake extraction of crude Jatropha oil from Jatropha seeds.

Daimler Chrysler of Germany has also been allowed to set up a joint venture company to undertake body building of buses.

Govt clears FDI proposals

The government today approved 22 foreign direct investment (FDI) proposals entailing an inflow of Rs 511.5 crore, including that of World Bank's private sector arm IFC and global private equity player Goldman Sachs.

International Finance Corporation will take up 18% stake in domestic stocks and commodities brokerage firm Angel Infin for Rs 152 crore. US-based Goldman Sachs and Australia's Macquarie will pick 40% stake in PTC India Financial Services, a non-banking financial arm of power trading firm PTC India, for Rs 155.74 crore.

The proposals were cleared by finance minister P Chidambaram on the recommendations of Foreign Investment Promotion Board (FIPB), an official statement said.

"The equity investment will support Angel Infin, based in Mumbai, to expand its operations to tier II and III cities in India and introduce new products," official sources said.

However, a proposal of Flemingo to open duty free shops outside airports and in hotels has been rejected. A proposal of leading retailer Dolce & Gabbana to set up a joint venture with 51% stake to undertake single brand retailing of fashion and lifestyle products has been put on hold.

FIPB has also deferred a decision on the proposal of Russia's Sistema Joint Stock Financial Corp to increase its stake from 10% to 74% in a telecom firm.