LAKSH Career Academy

LAKSH Career Academy
Author: Hiren Dave

Tuesday 21 June 2016

21 JUNE 2016

Ø  The Modi government on Monday announced what it termed a “radical liberalisation” of the Foreign Direct Investment (FDI) regime by easing norms for a host of important sectors, including defence, civil aviation and pharmaceuticals, opening them up for complete foreign ownership.
Ø  The government decision to liberalise conditions allowing 100 per cent FDI in the defence sector may result in at least some foreign entities setting up subsidiaries in India, said industry experts. The government on Monday removed the condition of “state-of-the-art” technology for permitting 100 per cent FDI in the defence sector. The new condition is that the companies wanting to invest 100 per cent FDI and open a subsidiary needs to bring in only “modern” technology. The new rule is 49 per cent FDI in defence under the automatic route. Foreign investment beyond that would be permitted through government approval route in cases resulting in “modern” technology. The FDI limit for the defence sector has been made applicable to manufacturing of small arms and ammunition covered under the Arms Act, 1959.

Ø  Opening up foreign investments in the civil aviation sector, the Union government on Monday allowed overseas entrepreneurs, other than airlines, to bring in up to 100 per cent foreign direct investment (FDI) to set up an airline in India. However, foreign airlines will be permitted to invest only up to 49 per cent in an airline. At present, foreign investment in a scheduled or regional air transport service or domestic scheduled passenger airline is permitted up to 49 per cent. It has now been decided to raise this limit to 100 per cent, with FDI up to 49 per cent permitted under the automatic route and beyond 49 per cent through government approval. 100 per cent FDI is now allowed in airports, airlines, ground handling, flying training institutes and maintenance, repair and overhaul (MRO) units. Though equity holding of foreign airlines is still limited to 49 per cent, a foreign airline can join hands with its sovereign fund or private investors and set up a 100 per cent foreign-owned airline in India. Foreign airlines, at present, own stake in Jet Airways, Vistara and AirAsia India. In 2013, Jet Airways sold a 24 per cent stake to Etihad Airways. Vistara is a joint venture between Tata Sons (51 per cent) and Singapore Airlines (49 per cent). AirAsia Bhd owns a 49 per cent stake in AirAsia India and Tata Sons 51 per cent. 

No comments:

Post a Comment