Government allows 100 per cent FDI in single-brand retail via automatic route

The Indian cabinet cleared a proposal on Wednesday allowing 100 percent foreign direct investment (FDI) in single-brand retail via the automatic route, government spokesman Frank Noronha said.

Currently, the government allows just 49 per cent under the automatic route.

The UPA government had earlier allowed 51% FDI in multi-brand retail in 2012 but stepped back after protests from the Opposition. After PM Modi came to power his government had put the policy on hold.

In July 2015, the cabinet had allowed all companies to raise foreign portfolio investment up to 49 per cent through the automatic route.

In June 2016, the NDA government had allowed 100 per cent FDI in food retail.

The government said that the decision would help provide ease of doing business and also lead to larger FDI inflows contributing to growth of investment, income and employment.

Further it has clarified that real-estate broking service does not amount to real estate business and is therefore, eligible for 100 per cent FDI under automatic route.

The cabinet also decided to allow FIIs/FPIs to invest in power exchanges through primary market as well.

So far 49 per cent FDI was permitted under automatic route in power exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010. However, FII/FPI purchases were restricted to secondary market only.