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In contract manufacturing, government likely to permit 100 per cent FDI

IBEF:  August 13, 2019

The government is working on a proposal to permit 100 percent FDI in contract assembling to attract overseas investment.

As per the current foreign investment policy, 100 percent foreign direct investment (FDI) is allowed in the manufacturing segment under the automatic course. A producer is also permitted to sell items fabricated in India through wholesale and retail channels, including through e-commerce, without government's endorsement.
It is an appreciated proposal for technology-based companies like Apple.

Finance Minister Nirmala Sitharaman in her Budget discourse in July had proposed relaxation in the FDI standards for specific areas, for example, aviation, AVGC (Animation, Visual effects, Gaming and Comics), insurance, and single-brand retail to attract more overseas investment.
FDI in India dropped 1 per cent to US$ 44.36 billion in 2018-19.

The government had relaxed FDI rules for a few sectors, including single-brand retail, non-banking financial companies and development.

Foreign investment is considered as crucial for India, which needs billions of dollars for redesigning its infrastructure sector, for example, ports, airplane highways to boost development.

FDI helps in improving the country’s equalization of payments situation and reinforce the rupee value against other global currencies, particularly the US dollar.

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