FDI policy shows slow march
The government is hopeful of eventually clearing the path to 51% foreign direct investment (FDI) in the retail sector through a broad consensus on the issue in consultation with state governments. However, the ground-level action is stronger in the case of aviation.india Updated: Mar 17, 2012 01:42 IST
The government is hopeful of eventually clearing the path to 51% foreign direct investment (FDI) in the retail sector through a broad consensus on the issue in consultation with state governments. However, the ground-level action is stronger in the case of aviation.
The finance minister said that a proposal was under consideration to allow foreign airlines to acquire up to 49% equity in air transport undertakings.
Organised retail helps in reducing cost of intermediation due to economies of scale, benefiting both consumers and producers, said Mukherjee.At present, 100% FDI in single brand and in cash-and-carry wholesale trade. "The decision in respect of allowing FDI in multi-brand retail trade up to 51%, subject to compliance with specified conditions, has been held in abeyance. Efforts are on to arrive at a broad-based consensus in consultation with the state governments," said Mukherjee.
He also said that the proposal for allowing foreign carriers to invest up to 49% in the domestic carriers is under active consideration of the Cabinet.
“A proposal for allowing foreign airlines to participate up to 49% in the equity of an air transport undertaking engaged in schedule and non-schedule transport services is under active consideration,” he said. The government currently allows up to 49% FDI in Indian carriers by companies other than airlines.
The civil aviation sector is currently passing through a bad phase as all leading airlines are making losses. Civil aviation minister Ajit Singh recently sought 49% FDI for the sector.
However, the industry is disappointed as it was expecting some concrete announcement from the government.
“An announcement on FDI in multi-brand retail and aviation sector would have given a positive signal that the government is serious about reforms,” said the chief executive officer of a retail company.