oppn parties Welcome Moves On FDI But Lots Remains To Be Done

News Snippets

  • T20 WC: USA enter Super Eights as their last match against Ireland gets washed out. They were ahead of Pakistan in the points tally. Pakistan were eliminated
  • T20 WC: USA enter Super Eights as their last match against Ireland gets washed out. They were ahead of Pakistan in the points tally. Pakistan were eliminated
  • BJD leader and former Odisha CM Naveen Patnaik said that the criticism of his aide V K Pandian is "regrettable"
  • As more than 20 BJP ministers lost in the recent elections, the new Union cabinet will have many new faces from the party
  • Congress Working committee asks Rahul Gandhi to take up the position of Leader of Opposition in Lok Sabha. Gandhi says he will consider the request
  • RBI governor Shaktikanta Das said that gold was shifted to India as the quantum of RBI gold abroad had increased due to recent purchases
  • Delhi HC rules that submitting photographic evidence of adultery will not be enough, they will have to be proved as authentic in the age of deepfakes
  • A four-member panel will review NEET-UG results of 1563 candidates to check if they were given extra marks for exam time loss
  • Mamata Banerjee says her party will not join Modi's oath-taking ceremony. Also says INDIA bloc might stake claim to form government later
  • K C Tyagi of the JD(U) dropped a bombshell when he said that Nitish Kumar was offered the post of prime minister for switching sides. Opposition leaders rubbished the claim
  • This May was India's hottest month in 36 years says IMD
  • T20 WC: India take on Pakistan today. Telecast to begin at 8pm IST
  • T20 WC: Afghanistan stun New Zealand and Bangladesh win against Sri Lanka
  • T20 World Cup: Australia beat England by 36 runs. This spoils England's chances of making the playoffs as they have lost both their matches till now
  • Heat wave continues in the country as monsoon moves slow
G7 commits to promote India-Europe corridor
oppn parties
Welcome Moves On FDI But Lots Remains To Be Done

By Ashwini Agarwal

The government has initiated a series of measures to reverse the economic slowdown and lack of investment inflow. The domestic investment scenario is largely dependent on a surge in demand, but ever since the trade war between the US and China has intensified, FDI in India has assumed importance. Companies looking to shift manufacturing base from China can look at India provided it eases its restrictions. Hence, the government has announced several measures to attract FDI. It has opened commercial coal mining, as also sale of the mineral, for 100% FDI through the automatic route. (Although 100% FDI was allowed in coal mining, it was only for captive consumption). It has also allowed 100% FDI in contract manufacturing. 26% FDI is now allowed, with prior approval, in digital media. Among other measures, sourcing norms for single brand retail have been relaxed with all local procurement counting towards the limit, a five-year combined window to meet the requirements and exports by such entities merged with local sales. These units can also begin operations as online sellers before going for brick-and-mortar stores.

The decision to open coal mining to 100% FDI is welcome. Despite having the largest deposits of coal, India is the largest importer of the black mineral. This is because lack of modernization in coal mining leading to non-optimal use and sub-standard products. Hopefully, FDI will bring latest equipments and techniques to allow better mining. But the government also needs to rectify the mess in the power sector that is the biggest consumer of coal. Electricity boards and companies are unable to pay timely and this will prevent foreign companies to look at coal mining for investment.

If foreign companies will shift base to India, not all of them would seek to establish factories on their own. They will look at contract manufacturing as an option. Hence, the decision to allow 100% FDI in contract manufacturing is welcome. It will allow the companies to select local partners better placed to deal with local authorities and rules, invest in technology to allow them to set up the units and buy the products. This will allow them complete ownership control and hence control over the quality of the produce. This decision will definitely amount to ease of business and will attract investment.

The situation was turning alarming with foreign investment inflows going down steeply. India cannot let go of this opportunity when companies are looking to leave China. With many of them looking at Vietnam (Google has already shifted its Pixel mobile manufacturing base there) and Thailand, India needed to ease the restrictions to attract them. Although a lot still needs to be done, a beginning has been made. The government must move fast to address the other concerns of these manufacturers before they decide on some other location.