PM defers FDI review as FM gets busy with Opposition
The government is learnt to have ‘’postponed’’ a high-level meeting headed by Prime Minister Narendra Modi for reviewing issues related to foreign direct investment (FDI) on Friday amid a buzz that the Centre was considering relaxing FDI caps in sectors such as multi-brand retail and the print media.
The meeting was called to review the progress of FDI approvals across sectors after the recent abolition of the Foreign Investment Promotion Board (FIPB), the road map for alternative mechanisms, as well as matters concerning foreign investors in construction and real estate, a source in the know told Business Standard.
He dismissed as “speculative” any talk on FDI liberalisation in multi-brand retail and media. “There’s no such proposal at this point,” he said.
Since Union Finance Minister Arun Jaitley was with members of the Opposition ahead of the Monsoon Session of Parliament, beginning Monday, it was decided to postpone the FDI meeting, the source told Business Standard.
However, Union Minister of State for Commerce (independent charge) Nirmala Sitharaman, Department of Industrial Policy and Promotion (DIPP) Secretary Ramesh Abhishek, and Economic Affairs Secretary Subhash Garg met the Prime Minister for one and a half hours, another source said. The subject of discussion could not be confirmed.
“No fresh date has been decided yet for the FDI review meeting,” said an official.
In May, the Cabinet approved the abolition of the FIPB, which was, for 25 years, the single-point window for clearing FDI proposals requiring government approval. The body is being replaced by a new mechanism under which the proposals will be approved by the ministries concerned. Proposals in sensitive sectors will require the home ministry’s approval.
The respective administrative ministries will now start clearing proposals in consultation with the DIPP, which will also issue the standard operating procedure (SOP) for processing applications and decisions of the government under the extant FDI policy. As for the other issue on the agenda, up to 100 per cent automatic FDI is allowed in construction development projects. This includes civil projects such as developing townships, and constructing residential/commercial premises, roads, or bridges.
Also included are hotels, resorts, hospitals, and recreational facilities, among others. But the government has clarified in the consolidated FDI policy that the real estate business is out of its purview. This includes FDI in a profit-making real estate business, constructing farm houses, and trading in transferable development rights (TDRs).