Govt notifies FDI relaxation norms in coal mining, contract manufacturing, single-brand retail

  • On 28 August, the government allowed 100 percent foreign investment in coal mining and contract manufacturing, eased sourcing norms for single-brand retailers and approved 26 percent foreign investment in digital media, as it looks to boost economic growth from over six-year low of 5 percent

  • In the current policy, 100 percent FDI is allowed under the automatic route in the manufacturing sector but it was silent on contract manufacturing

  • The current FDI policy was silent on the fast-growing digital media segment

New Delhi: The Department for Promotion of Industry and Internal Trade (DPIIT) on Wednesday notified the recent decisions to relax foreign direct investment (FDI) norms in sectors such as coal mining, contract manufacturing, and single-brand retail trading.

The DPIIT, under the commerce and industry ministry, deals with FDI-related issues. It notifies FDI-related government decisions through Press Notes.

The department has also notified the decision to allow 26 percent FDI in digital media, a move over which certain industry and experts have raised issues.

On 28 August, the government allowed 100 percent foreign investment in coal mining and contract manufacturing, eased sourcing norms for single-brand retailers and approved 26 percent foreign investment in digital media, as it looks to boost economic growth from over six-year low of 5 percent.

 Govt notifies FDI relaxation norms in coal mining, contract manufacturing, single-brand retail

Representational image. News 18.

According to the Press Note of the department, 100 percent FDI is permitted for sale of coal, coal mining activities including associated processing infrastructure subject to the provisions of Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957.

Amending FDI norms for the manufacturing sector, it said foreign investment in 'manufacturing' sector is under the automatic route.

"Manufacturing activities may be either self-manufacturing by the investee entity or contract manufacturing in India through a legally tenable contract, whether on principal to principal or principal to agent basis," it added.

For single-brand retail trading, it retail trading through e-commerce can also be undertaken prior to the opening of brick and mortar stores, subject to the condition that the company opens brick and mortar stores within two years from the date of start of online retail.

It added that a single brand retail company with FDI selling Indian brands now will not have to follow the condition that such firm should sell products under the same brand internationally.

They also do not have to comply with the condition of signing a legally tenable agreement to undertake the retailing.

In the coal sector, now foreign players can invest 100 percent for mining and sale of coal under the automatic route. They will also be able to carry out other associated processing infrastructure operations related to the sector such as coal washery, crushing, coal handling, and separation (magnetic and non-magnetic).
According to the current FDI policy, 100 percent foreign investments under the automatic route was allowed for coal and lignite mining for captive consumption by power projects, iron and steel and cement units only.

But, the decision is subject to provisions of the Coal Mines (Special Provisions) Act, 2015, and the Mines and Minerals (Development and Regulation) Act, 1957.
The government also clarified that 100 percent FDI is permitted for contract manufacturing.

In the current policy, 100 percent FDI is allowed under the automatic route in the manufacturing sector but it was silent on contract manufacturing.

Further, the government permitted 26 percent overseas investments through the government approval route for uploading or streaming of news and current affairs through digital media, on the lines of print media.

The current FDI policy was silent on the fast-growing digital media segment.

According to industry players and experts, the government's move to cap FDI in news and current affairs digital media to 26 percent throws up questions that need clarifications as some of those who were looking to raise funds could be restricted.

Deloitte India Partner Jehil Thakkar had said clarity is needed on how to treat cases of television broadcasters which are streaming news online but are allowed 49 percent FDI.

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Updated Date: Sep 18, 2019 18:15:08 IST