FDI Policy revisited
In an ongoing effort towards streamlining the Government of India’s stance on Foreign Direct Investment, the Ministry of Commerce & Industry, in Press Note No. 7 dated June 16, 2008 has reviewed/consolidated the FDI policy, making it more comprehensive and self-contained than the earlier Press Note 4 of 2006. A corrigendum pertaining to “non-banking finance companies (NBFCs)” was also issued on June 27, 2008. Apart from listing out the sector-specific policy for FDI, the new Press Note also lists sectors, which are prohibited for FDI. These prohibited sectors cover retail (except single brand retailing), atomic energy, lottery, gambling & betting, chit funds business and trading in transferable development rights.
With the exit of the left parties from the ruling coalition, it is expected that the economic reforms will now get a big push forward. Some of the areas which need immediate attention are permitting foreign equity in multi-brand retailing, higher equity for foreign companies in single-brand retailing, higher foreign equity for foreign companies in insurance sector, development of a vibrant corporate bond market, easier norms for foreign banks to set up operations in India, divestment of government equity in public sector undertakings, privatisation of state-run companies, liberal labour policies for corporate sector etc. Subject to the government proving its majority in Parliament, these and other areas may get a fresh look soon - hopefully !! Clouds do have silver linings!
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