India is planning to put around 98% of sectors that are open to foreign investments under the automatic route so that investors are spared of the trouble of approaching either the finance or the commerce ministry for any approval, a senior government official said on Tuesday.
“We are putting maximum sectors (of FDI) through automatic route. Our belief is that nobody should come to the government. So we get 92% of FDI coming through automatic route. We are targeting that almost 97-98% must come through the automatic route, Amitabh Kant, secretary in the department of industrial policy and promotion (DIPP) said here at a function organised by industry chamber Assocham.
“We do not want any businessman to enter Udyog Bhavan (the Commerce and Industry Ministry building), we do not want any businessman to enter the finance ministry,” he added. Currently, foreign investments are allowed either through the automatic route or through the approval of the FIPB.
Kant’s statement came after the Narendra Modi-led NDA government unveiled “big-bang reforms” earlier this month by deciding to ease rules for attracting foreign direct investments (FDI) in as many as 15 sectors ranging from real estate to banking to defence to retail and broadcasting. The government decided to allow greenfield investments in the construction sector including in townships as well as residential and commercial projects. It permitted foreign investors to invest in projects of all sizes without any minimum threshold for the funds to be brought in.
The policy of fungibility among different types of foreign investment announced in July was decided to be extended to private-sector banking and defence and the role of the FIPB was enhanced, among others. In the case of defence, foreign investment up to the sectoral ceiling of 49% will now be allowed via the automatic route while investments above that, which earlier required to be cleared by the Cabinet Committee on Security provided state-of-the-art technology is brought in, will now require the FIPB’s approval only.
Some of the relaxed rules, annouced earlier this month, were notified by the government on Tuesday. FDI flows into India rose to $19.4 billion from January to June, up 30% from a year earlier.
Kant also said that the government is initiating measures to improve ease of doing business both at the central and state level to woo foreign investors.
“States must become easy and simple place to do business. My belief is that if we are able to get 10-12 states as champions of growth, if 12 states grow at a rate of 10%plus, then India would grow at 9-10% per annum,” Kant said. He added that the DIPP has given 340 points to sates to work on this year and on this basis the states would be ranked in terms of ease of doing business.