Government looks at relaxing FDI rules further

NEW DELHI: The government is looking at further relaxing the foreign direct investment policy after recent reforms that allowed automatic approval for most sectors and increased the limit in many areas.

India has become one of the most open economies in the world and 92% of its FDI now comes through the automatic route, Department of Industrial Policy & Promotion (DIPP) secretary Ramesh Abhishek said at the ‘India Means Business’ session of the India Economic Summit. “We have allowed 100% FDI even in very sensitive sectors and under automatic route in most cases.

There is a huge potential in India to attract FDI.” Reforms are ongoing and based on industry feedback, the government will take steps to ease processes, Abhishek said, indicating further relaxation in the foreign investment regime.

“We have taken a series of transformative steps in the last two years...from bankruptcy code to GST, which the government is ready to launch as per schedule,” Abhishek said. The target date to implement GST is April 1.

The DIPP secretary said the government is looking at “various restrictive policies” brought to its notice by ecommerce companies. A panel set up by Niti Aayog to look into issues faced by the sector will soon submit its recommendations to bring about a policy that encourages competition and transparency.

The government will act on feedback and tackle the issues of corruption and contract enforcement and improve the public-private partnership model, Abhishek said. He was responding to queries about the last tranche of payments due to companies remaining stuck in prolonged government procedures.

Srivatsan Rajan, chairman of Bain & Co, said the difficulty of doing business in India is still very significant, especially in manufacturing. “Local and state-level administration have to do a lot of work to bring about ease of doing business,” he pointed out. The government has started ranking states on the ease of doing business on a 340-point action programme. DIPP, which is spearheading the exercise, will release the final ranking this month.