April 25, 2018

CAIT opposes 100 pc FDI in single brand retail via automatic route

14 January 2018, 08:32 | Kenneth Drake

FDI policy liberalised, 100% FDI now in retail, construction

Single-brand retail

The Centre of Indian Trade Unions (CITU) on Thursday denounced the decision of the government to allow 49 per cent foreign direct investment (FDI) in Air India and said it was aimed at expediting the privatisation of the national carrier.

The Government, on the other hand, has pushed the proposal with a view to provide an investor-friendly climate to foreign players and in turn attract more FDI to boost economic growth, which it expects will create jobs.

While foreign airlines were allowed to invest up to 49 per cent in the paid-up capital of Indian private airlines under the government approval route, this provision was not applicable to Air India.

Overseas investment policy has also been liberalised in case of power exchanges, an online platform where electricity is traded.

While expressing utter dismay they said that 100 per cent FDI in single brand -automatic route will kill domestic manufacturing sector and will give a big jolt to "Make in India". Definition of "medical devices" amended in the FDI Policy.

This is the second time that the FDI policy has been changed by the current government. Earlier also 100 per cent FDI was allowed in the segment, but it required government approval.

"It has been chose to permit single brand retail trading entity to set off its incremental sourcing of goods from India for global operations during initial five years, beginning April 1 of the year of the opening of first store against the mandatory sourcing requirement of 30% of purchases from India", the statement said. "This should also generate employment and give the Indian consumers access to several worldwide brands", said Pinakiranjan Mishra, partner and national leader, consumer products and retail, EY. It remains an unfinished agenda for the government. As the real estate business has been crippled, allowing 100% FDI under the automatic route for real estate broking services can help matters.

Any single-brand retailer-which sell only their own products, such as IKEA or H&M-that opens stores in India has to buy at least 30% of the goods sold from Indian small and medium-size companies.

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