The government is planning to ease the foreign direct investment (FDI) regulations further by streamlining the clearance processes in a few areas where restrictions still exist, according to official sources. An ongoing review of the FDI norms might also result in a calibrated opening up of big-ticket areas like retail and e-commerce to foreign investors, and allowing 100% foreign ownership of locally incorporated e-gaming ventures that offer “games of skill” on their platforms.
Additionally, to boost investor confidence and promote ease of doing business, as many as 100 amendments are being planned in the existing laws to de-criminalise offences that are not of serious nature.
The moves are aimed at imparting further momentum to the domestic manufacturing industry, with foreign capital, technology and management skills, and enable the high-growth services sectors like e-gaming to integrate faster with the global supply chains, by harnessing domestic talent, the sources said.
On Wednesday, department of promotion of industry and internal trade (DPIIT) secretary Amardeep Singh Bhatia said that the “government would continue to streamline the process for clearance of FDI proposals in the restricted sectors”. The idea is to give the clearances “in the shortest possible time, while targeting $100-billion inflows a year going ahead”, he said.
“FDI in most of the sectors is already under the automatic route and only a few sectors still remain in the restricted category,” Bhatia noted, adding that restrictions would be eased wherever required. “There has been a continuous effort to liberaliseg FDI,” Himani Pande, additional secretary, DPIIT, said.
Jan Vishwas Bill 2.0 would bring about 100 amendments in various laws to “de-criminalise” minor offences, Bhatia said, adding that the DPIIT is “in talks with other departments to carry out these changes”.
“Some inputs have been received from different departments to decriminalise laws administered by them. Stakeholders too have responded with suggestions in areas where they are looking for decriminalisation without compromising on safety, security and national interest,” he said. Besides, the Centre is also working with the states to rationalise, decriminalise and simplify their laws, and launch their own versions of Jan Vishwas.
The first Jan Vishwas Bill, passed last year, amended 42 existing Acts administered by 19 ministries. Within these Acts that deal with different areas of business, 183 provisions have been changed to decriminalise offences that are minor, procedural and technical in nature.
Among the sectors where FDI restrictions still exit are civil aviation, where FDI is capped at 49% and government approval is required for holdings in airlines operating scheduled and non-scheduled air transport services. Print media, broadcast services and even in some areas of agriculture like cultivation of vegetables, FDI norms have been due for liberalisation for long, analysts feel.
The government has been progressively easing the FDI policy. Earlier this year, it offered incentives of lower import tariffs for electric vehicle (EV) manufacturers subject to conditions, including indigenisation. In February, it relaxed the FDI policy for space sector by allowing 100% FDI in the manufacture of components for satellites.
In his Independence Day address to the nation last month, Prime Minister Narendra Modi called for making India a “global gaming hub” by putting local talent into best use for game desigining and conduct. Any FDI liberalisaion in the sector could come with a rider to restrict proliferation of “games of chance”, which include indiscriminate betting and gambling, according to sources.
A note circulated by the DPIIT had earlier sought to distinguish between online ‘games of skill’ and ‘games of chance’ for the purpose of FDI. This could, however, be at variance with the policy adopted by the goods and services tax (GST) for the purpose of taxation of the sector, where this distinction was done away via a clarificatory order.
Currently, 100% FDI is not expressly disallowed in the sector, but is seldom entertained.
The overall FDI, which includes equity and reinvested earnings, in India was around $70 billion in 2023-24, after peaking to $84.8 billion in 2021-22. “We are expecting this to increase to at least $100 billion in the years to come,” Bhatia said at a press conference on 10 Years of Make in India.
FDI equity inflows into the manufacturing sector over the past decade (2014-24) reached $165.1 billion, marking a 69% increase compared to the previous decade (2004-14), which saw inflows of $97.7 billion.