Daily Current Affairs Quiz 2019<\/a><\/strong><\/p>\n\n\n\nMajor Impact and Benefits from FDI Policy Reform<\/h4>\n\n\n\n
i) The changes in FDI policy will result in making India a\nmore attractive FDI destination, leading to benefits of increased investments,\nemployment and growth.<\/p>\n\n\n\n
ii) In the coal sector, for sale of coal, 100% FDI under\nautomatic route for coal mining,activities including associated processing\ninfrastructure will attract international players to create an efficient and\ncompetitive coal market.<\/p>\n\n\n\n
iii) Further, manufacturing through contract contributes\nequally to the objective of Make in India. FDI now being permitted under\nautomatic route in contract manufacturing will be a big boost to Manufacturing\nsector in India.<\/p>\n\n\n\n
iv) Easing local sourcing norms for FDI in Single Brand\nRetail Trading (SBRT) was announced in Union Budget Speech of Finance Minister.\nThis will lead to greater flexibility and ease of operations for SBRT entities,\nbesides creating a level playing field for companies with higher exports in a\nbase year. In addition, permitting online sales prior to opening of brick and\nmortar stores brings policy in sync with current market practices. Online sales\nwill also lead to creation of jobs in logistics, digital payments, customer\ncare, training and product skilling.<\/p>\n\n\n\n
v) The above amendments to the FDI Policy are meant to\nliberalize and simplify the FDI policy to provide ease of doing business in the\ncountry, leading to larger FDI inflows and thereby contributing to growth of\ninvestment, income and employment.<\/p>\n\n\n\n
Background<\/h4>\n\n\n\n
FDI is a major driver of economic growth and a source of\nnon-debt finance for the economic development of the country. Government has\nput in place an investor friendly policy on FDI, under which FDI up to 100% is\npermitted on the automatic route in most sectors\/ activities. FDI policy\nprovisions have been progressively liberalized across various sectors in recent\nyears to make India an attractive investment destination. Some of the sectors\ninclude Defence, Construction Development, Trading, Pharmaceuticals, Power\nExchanges, Insurance, Pension, Other Financial Services, Asset reconstruction\nCompanies, Broadcasting and Civil Aviation.<\/p>\n\n\n\n
These reforms have contributed to India attracting record\nFDI inflows in the last 5 years. Total FDI into India from 2014-15 to 2018-19\nhas been US $ 286 billion as compared to US $ 189 billion in the 5-year period\nprior to that (2009-10 to 2013-14). In fact, total FDI in 2018-19 i.e. US $\n64.37 billion (provisional figure) is the highest ever FDI received for any\nfinancial year.<\/p>\n\n\n\n
Global FDI inflows have been facing headwinds for the last\nfew years. As per UNCTAD’s World Investment Report 2019, global foreign direct\ninvestment (FDI) flows slid by 13% in 2018, to US $1.3 trillion from US $1.5\ntrillion the previous year – the third consecutive annual decline. Despite the\ndim global picture, India continues to remain a preferred and attractive\ndestination for global FDI flows. However, it is felt that the country has the\npotential to attract far more foreign investment which can be achieved\ninter-alia by further liberalizing and simplifying the FDI policy regime.<\/p>\n\n\n\n
In Union Budget 2019-20, Finance Minister proposed to\nfurther consolidate the gains under FDI in order to make India a more\nattractive FDI destination. Accordingly, the Government has decided to\nintroduce a number of amendments in the FDI Policy. Details of these changes\nare given in the following paragraphs.<\/p>\n\n\n\n
Coal Mining<\/h4>\n\n\n\n
As per the present FDI policy, 100% FDI under automatic\nroute is allowed for coal & lignite mining for captive consumption by power\nprojects, iron & steel and cement units and other eligible activities\npermitted under and subject to applicable laws and regulations. Further, 100%\nFDI under automatic route is also permitted for setting up coal processing\nplants like washeries subject to the condition that the company shall not do\ncoal mining and shall not sell washed coal or sized coal from its coal\nprocessing plants in the open market and shall supply the washed or sized coal\nto those parties who are supplying raw coal to coal processing plants for\nwashing or sizing.<\/p>\n\n\n\n
It has been decided to permit 100% FDI under automatic route\nfor sale of coal, for coal mining activities including associated processing\ninfrastructure subject to provisions of Coal Mines (special provisions) Act,\n2015 and the Mines and Minerals (development and regulation) Act, 1957 as amended\nfrom time to time, and other relevant acts on the subject. “Associated\nProcessing Infrastructure” would include coal washery, crushing, coal\nhandling, and separation (magnetic and non-magnetic)<\/p>\n\n\n\n
Contract Manufacturing<\/h4>\n\n\n\n
The extant FDI policy provides for 100% FDI under automatic\nroute in manufacturing sector. There is no specific provision for Contract\nManufacturing in the Policy. In order to provide clarity on contract\nmanufacturing, it has been decided to allow 100% FDI under automatic route in\ncontract manufacturing in India as well. <\/p>\n\n\n\n
Subject to the\nprovisions of the FDI policy, foreign investment in ‘manufacturing’ sector is\nunder automatic route. Manufacturing activities may be conducted either by the\ninvestee entity or through contract manufacturing in India under a legally\ntenable contract, whether on Principal to Principal or Principal to Agent\nbasis.<\/p>\n\n\n\n
Single Brand Retail Trading (SBRT)<\/h4>\n\n\n\n
The extant FDI Policy provides that 30% of value of goods\nhas to be procured from India if SBRT entity has FDI more than 51%. Further, as\nregards local sourcing requirement, the same can be met as an average during\nthe first 5 years, and thereafter annually towards its India operations. With a\nview to provide greater flexibility and ease of operations to SBRT entities, it\nhas been decided that all procurements made from India by the SBRT entity for\nthat single brand shall be counted towards local sourcing, irrespective of\nwhether the goods procured are sold in India or exported. Further, the current\ncap of considering exports for 5 years only is proposed to be removed, to give\nan impetus to exports.<\/p>\n\n\n\n
The extant Policy provides that as regards local sourcing\nrequirement, incremental sourcing for global operations by the non-resident\nentities undertaking single brand retail trading, either directly or through\ntheir group companies, will also be counted towards local sourcing requirement\nfor the first 5 years. However, prevalent business models involve not only\nsourcing from India for global operations by the entity or its group companies,\nbut also through an unrelated third Party, done at the behest of the entity\nundertaking single brand retail trading or its group companies. In order to\ncover such business practices, it has been decided that ‘sourcing of goods from\nIndia for global operations’ can be done directly by the entity undertaking\nSBRT or its group companies (resident or non-resident}, or indirectly by them\nthrough a third party under a legally tenable agreement.<\/p>\n\n\n\n
The extant policy provides that only that part of the global\nsourcing shall be counted towards local sourcing requirement which is over and\nabove the previous year’s value. Such requirement of year-on-year incremental\nincrease in exports induces aberrations in the system as companies with lower\nexports in a base year or any of ‘ the subsequent years can meet the current\nrequirements, while a company with consistently high exports gets unduly\ndiscriminated against. It has been now decided that entire sourcing from India\nfor global operations shall be considered towards local sourcing requirement.\n(And no incremental value)<\/p>\n\n\n\n
The present policy requires that SBRT entities have to\noperate through brick and mortar stores before starting retail trading of that\nbrand through e-commerce. This creates an artificial restriction and is out of\nsync with current market practices. It has therefore been decided that retail\ntrading through online trade can also be undertaken prior to opening of brick\nand mortar stores, subject to the condition that the entity opens brick and mortar\nstores within 2 years from date of start of online retail. Online sales will\nlead to creation of jobs in logistics, digital payments, customer care,\ntraining and product skilling.<\/p>\n\n\n\n
Digital Media<\/h4>\n\n\n\n
The extant FDI policy provides for 49% FDI under approval\nroute in Up-linking of ‘News &Current Affairs’ TV Channels. It has been\ndecided to permit 26% FDI under government route for uploading\/ streaming of\nNews & Current Affairs through Digital Media, on the lines of print media.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the proposal for Review of Foreign Direct Investment (FDI) on various sectors. Daily Current Affairs Quiz 2019 Major Impact and Benefits from FDI Policy Reform i) The changes in FDI policy will result in making India a more attractive FDI destination, leading […]<\/p>\n","protected":false},"author":13,"featured_media":5548,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[45],"tags":[658],"class_list":["post-5547","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs-articles","tag-fdi"],"_links":{"self":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/5547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/comments?post=5547"}],"version-history":[{"count":1,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/5547\/revisions"}],"predecessor-version":[{"id":5549,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/5547\/revisions\/5549"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/media\/5548"}],"wp:attachment":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/media?parent=5547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/categories?post=5547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/tags?post=5547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}