Government Relaxes FDI Norms for Single Brand Retail, E-Commerce for Food Products

Government on Monday relaxed Foreign Direct Investment (FDI) norms in a host of sectors including civil aviation, single-brand retail, defence, e-commerce, and pharma by permitting more investments under automatic route.

Other sectors in which FDI norms have been relaxed include e-commerce in food products, broadcasting carriage services, private security agencies and animal husbandry.

"Now most of the sectors would be under automatic approval route, except a small negative list. With these changes, India is now the most open economy in the world for FDI," said an official statement.

The decision to further liberalise FDI regime with the objective of "providing major impetus to employment and job creation in India" was taken at a meeting chaired by Prime Minister Narendra Modi on Monday.

This is the second major reform in the FDI space. The Centre in last November had significantly relaxed the foreign investment regime.

In the tech sector, perhaps the most important announcement was relaxation of the FDI norms for single brand retail, in context of the planned entry into the India's retail space by Apple, LeEco, and Xiaomi.

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In its statement, the government said, "It has now been decided to relax local sourcing norms up to three years and a relaxed sourcing regime for another five years for entities undertaking Single Brand Retail Trading of products having 'state-of-art' and 'cutting edge' technology. "

As for e-commerce in food products, the government's statement said, "It has now been decided to permit 100% FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India."