Manufacturing and job generation will get a boost by the latest round of liberalisation in Foreign Direct Investment (FDI) norms that include doing away with dual clearances, Economic Affairs Secretary Shaktikanta Das said on June 20.
"With this (FDI) liberalisation, we expect manufacturing activity to come in...more activity in defence products. The driving force behind the whole thing is that all this investment should facilitate creation of jobs," he told reporters.
Launching the second set of liberalisation of the foreign investment, the government relaxed the norms in host of sectors including defence, civil aviation, pharmaceuticals, single brand retail trade (SBTR), e-commerce in food products, broadcasting carriage services, private security agencies and animal husbandry.
The last set of major FDI reforms were announced by this government in November 2015.
"The decision on FDI liberalisation of June 20 is a followup to the decisions which were taken last November when a whole lot of reforms were announced. In the budget (the relaxation) was announced in stock exchanges and NBFCs," Das said.
He further said that under the amendment norms, wherever approval is given by the regulator, the companies would not need to the approach the Foreign Investment Promotion Board (FIPB) for clearance.
Basically, Das said, "The idea is to go for process simplification and make everything process driven. Now today's decisions are also a continuation of the same approach that wherever there are regulators, there is no need for dual clearance by FIPB".
The whole approach is to make the process of FDI approval "as far as possible automatic," he said, adding faster clearances would encourage investment flows and generate additional jobs in the economy.
Moreover, he said, the policy changes also indicate that the government would continue the process of reforms.
On changes in the FDI norms in the civil aviation, Das said the amended policy will improve flow of investment in the sector.
"This will be a very big (policy) changer," he said, adding civil aviation companies can access larger FDI flows.
Larger investments, he added, would "definitely assist the domestic aviation companies to strengthen themselves, to expand their network and also in the process create jobs for our youth".
Moreover, he added, there would be "no pressure on anybody to bring FDI. It is not compulsory on domestic aviation companies to bring FDI. If they need, they will get it and they will be able to increase there capability".
As regards the defence sector, Das said, the government has further liberalised the policy as the existing norms did not attract investment proposals.Speaking to CNBC-TV18 he said that the government’s idea is to encourage local manufacturing, for which the state-of-the-art clause has also been modified.
New norms in the policy enables Indian entrepreneurs in the pharma industry to be globally competitive and gives them access to capital for more research and development investment.
Commenting on the Brexit scenario he said that the finance ministry and RBI are working together to tackle volatility caused by the possible exit of Britain from the European Union.
However, he is confident that India will be able to deal with the Brexit issue and sees only marginal impact on the country.With inputs from CNBC-TV18
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