The government is taking a calibrated approach in opening up sectors like retail for foreign direct investments, as it’s careful in not putting at stake self-created jobs of a large number of people, commerce and industry minister Nirmala Sitharaman said on Tuesday.
Asked why the government has put in a stringent condition announced in the Budget that 100% FDI will be allowed in the marketing of only those food products that are produced and manufactured in India, Sitharaman said: “We are clear that the FDI is welcome in sectors in which we need either technology or investments. But we are careful in allowing FDI in sectors where people are already self-employed and have made investments out of their family inheritance… For us to open up such sectors and then to put in peril jobs of self-employed individuals will also not be good.”
Currently, the government allows 100% FDI in only single-brand retailing.
Sitharaman said she met senior officials of a number of export promotion councils on Tuesday to take stocks of the country’s export scenario. She will chair a meeting of the reconstituted board of trade meeting on Wednesday to discuss ways to boost exports, which have contracted for a 15th straight month through February.
To give a boost to the domestic manufacturing of active pharmaceutical ingredients, for which India is largely dependent on China, the government is mulling setting up specified pharmaceutical zone where API manufacturers will be invited to invest and set up units, the minister said.
The ministry hasn’t yet established a mechanism to check if any e-commerce player with a market place model is flouting the recently-clarified FDI rules by providing discounts itself, the minister said. However, if required, the ministry will set up a mechanism, she added.
Last week, the Department of Industrial Policy and Promotion (DIPP) defined the market place model in e-commerce retailing and allowed 100% foreign direct investment (FDI) through automatic route in such a format. However, it said: “E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field.” Some analysts interpreted the government move as an indication of the beginning of the end of the discount era by e-commerce players like Amazon, Flipkart and Snapdeal.