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Cabinet Approved a Plan for Review of Foreign Direct Investment (FDI) Policy on Single Brand Retail Trading, Digital Media, Contract Manufacturing, and Coal Mining

Cabinet Approved Plan Review of Foreign direct Investment

Cabinet Approved a Plan for Review of Foreign Direct Investment (FDI) Policy on Single Brand Retail Trading, Digital Media, Contract Manufacturing, and Coal Mining

  

In 2019-20 Union Budget, the Finance Minister has recommended to further consolidate all the gains under FDI so as to make India a more appealing FDI destination. Going steady with its reform policy, the Union Cabinet has recently approved the plan for review of FDI Policy on various sectors on 28 August 2019.

The major highlights of the FDI Policy reform are as follows:

Single Brand Retail Trading (SBRT)

For offering enhanced flexibility and ease of operations in the SBRT sector, the below listed norms have been eased:

  • In case of SBRT firms with over 51% FDI, all procurements done from India by such SBRT firms for that single brand are going to be counted in the local sourcing of 30% bracket, regardless of whether the products obtained are sold in India or are exported outside. In addition, to give an push to exports, current limit of considering exports for five years only has been eliminated;
  • ‘Sourcing of goods from India for global operations’ could be done directly now by the firm conducting SBRT or its resident/non-resident group companies, or can be done indirectly by them via a third party with a legally-tenable agreement;
  • Additionally, complete sourcing from India for all the global operations would be considered for local sourcing requirement (with no incremental value);
  • Retail trading done through online trade could be undertaken before opening of brick and mortar stores, but this has a condition that the entity should open brick and mortar stores within two years beginning from the date of starting their online retail.

  

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