Govt to soon consider relaxing FDI norms in single brand retail, digital media

NEW DELHI: The Union Cabinet may soon consider relaxing foreign direct investment (FDI) norms in single-brand retail trading and digital media, in line with the announcements made by finance minister Nirmala Sitharaman in her budget speech.

As per a comprehensive plan to attract foreign investment, the Cabinet may also consider easier FDI norms for coal and contract manufacturing. The Department for Promotion of Industry and Internal Trade (DPIIT) has begun work on a proposal to relax FDI rules for a plethora of sectors including media, aviation, insurance, contract manufacturing and single-brand retail.

This comes in the wake of FDI equity inflows declining for the first time in six years in 2018-19, down 1% to $44.4 billion from $44.8 billion in the previous fiscal.


The government is likely to ease the annual procurement requirement for FDI in single-brand retail while retaining the 30% sourcing norm. This procurement requirement, viewed as a deterrent by investors, has to be met, in the first instance, as an average of five years’ total value of the goods purchased, beginning April 1of the year of opening of the first store. Thereafter, it needs to be met on an annual basis.

Moreover, the government is already working on a proposal to allow 100% FDI in contract manufacturing as there is no clarity on the matter in the existing norms which allow 100% FDI in the manufacturing sector under the automatic route. The government feels that contract manufacturing is a trading activity because a company only sells a product after getting it manufactured from someone else, whereas industry says it should be considered manufacturing.

Similarly, norms are being considered fog AVGC (animation, visual effects, gaming and comics) as the present rules apply to print media where 26% FDI is allowed through government approval route while 49% FDI is allowed in broadcasting content services through government approval route.