In­dia eases for­eign investment rules to aid econ­omy

Mizzima Business Weekly - - CONTENTS -

In­dia's cabi­net an­nounced 28 Au­gust that it would ease re­stric­tions on for­eign investment in four key sec­tors in a bid to shore up sup­port for the flag­ging econ­omy.

Asia's third-largest econ­omy has slowed in each of the past three quar­ters -- los­ing its sta­tus as the world's fastest-grow­ing and pil­ing pres­sure on Prime Min­is­ter Naren­dra Modi, whose govern­ment has un­veiled a slew of mea­sures in re­cent weeks to kick­start growth.

On Wednes­day, the govern­ment ap­proved 100 per­cent for­eign direct investment in the coal min­ing and con­tract man­u­fac­tur­ing sec­tors and al­lowed FDI of up to 26 per­cent in dig­i­tal me­dia. It also loos­ened sourc­ing re­quire­ments for sin­gle­brand re­tail­ers.

In­dia's com­merce and in­dus­try min­is­ter Piyush Goyal said the mea­sures would "boost ex­ports... and cre­ate mas­sive job op­por­tu­ni­ties".

The an­nounce­ments came two days after In­dia's cen­tral bank an­nounced a $24-bil­lion wind­fall for the cash-strapped govern­ment, which is also fac­ing a jobs cri­sis -- with un­em­ploy­ment at its high­est since the 1970s.

The auto sec­tor has been par­tic­u­larly badly hit, with car sales plung­ing in July for the ninth month run­ning, while weak con­sumer spend­ing and high taxes have hit de­mand for ev­ery­thing from bis­cuits to hair oil.

Fi­nance Min­is­ter Nir­mala Sithara­man re­cently re­vealed sev­eral mea­sures to help the econ­omy, in­clud­ing bring­ing for­ward a $10-bil­lion liq­uid­ity life­line for credit-shy banks and rolling back an ex­tra levy on eq­uity sales that had spooked for­eign in­vestors.

Sithara­man and other se­nior of­fi­cials have hinted that more steps could soon be an­nounced to tackle eco­nomic woes.

"The changes in FDI pol­icy will re­sult in mak­ing In­dia a more at­trac­tive FDI des­ti­na­tion, lead­ing to ben­e­fits of in­creased in­vest­ments, em­ploy­ment and growth," the govern­ment said in a state­ment.

The In­dian econ­omy is grow­ing - In­dian rail. Photo: Pix­abay

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