Big bang reforms: Government to consider FDI in multi-brand retail, aviation

NEW DELHI: The government will consider big bang FDI reform on Friday evening, after announcing a steep hike in diesel prices on Thursday. The items on agenda include decision on 51% FDI in multi-brand retail, or superstores.

The government will also consider allowing foreign airlines to pick up stakes in India's airline companies. At present 49% FDI is allowed in civil aviation, but foreign airlines are not allowed to invest.

The government could also announce a relaxation in the single brand policy to facilitate easier investment. Swedish retailer IKEA wants to invest Rs 10,000 crore in India but wants some relaxation in the terms.

External commercial borrowing terms are also likely to be eased further by increasing all in cost ceiling.

The government had allowed 51% FDI in multi-brand retail in December last year, but the decision was kept in abeyance following widespread opposition from the allies and opposition parties.

The union cabinet could consider allowing FDI in multi-brand subject to the rider that states will have the freedom to allow foreign investment funded in their jurisdiction. The FDI in airlines will allow India's debt leaden and loss-making airline companies to raise funds.