'FDI opening-up retains focus on Make in India'

New Delhi: The government has opened up the retailing business to overseas players but ensured that the focus on Make in India has been maintained, a top government official said on Tuesday.

Economic affairs secretary Shaktikanta Das said that instead of open-ended waiver from domestic purchases a more graded scheme had been put in place, while pointing to the rules for local sourcing by technology firms, such as Apple, which plan to open stores in the country. Under the revised norms, companies with "cutting edge" technology would be exempted from the 30% domestic sourcing norm for three years before getting up to five years to meet the requirement.

Similarly, Das told TOI, food retailers would automatically invest in creating back-end infrastructure and local processing and supply chain although the government had not mandated any norms while allowing 100% FDI. "No one is going to import potatoes from Australia but retailers will work with farmers to make their business model viable. It will happen automatically. I expect a strong interest from foreign companies," Das said. Food retailers have to mandatorily sell only food which is produced, processed or manufactured in India. The food processing ministry was insisting on mandating investment in back-end infrastructure as one of the conditions for the entry of overseas retailers. Das said that the opening up of this segment of the retail business would help stabilize prices to some extent.

Expanding on Prime Minister Narendra Modi's statement of India being the "most open" investment destination, Das said that even some of the advanced countries did not allow 100% FDI in sectors such as airlines.

Further, he said that domestic players did not have to fear foreign competition as they were robust enough to take them on globally. "The entry of global food chains has helped our home-grown brands prosper because they have modernised, adapted to competition and improved quality."

Asked about the government's decision to do away with the need for government approval in several cases — from acquisition up to 74% in existing pharma companies to 100% for DTH services and brownfield airports — the economic affairs secretary said the move was part of the exercise to do away with human interface and make it process-driven. He said that nearly 95% of the FDI proposals would not require government approval, as against 90-91% at present. "Once the budget-related proposals for non-banking finance companies are implemented, FIPB's work load will reduce further," he said. The government is looking to do away with the need for government permission for all NBFC activities that are regulated by various regulators.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.