Cabinet eases investment norms for single-brand retail, coal mining, manufacturing, digital media
The Centre on Wednesday announced major steps to attract foreign investment and give a boost to medical education in the country. The Government relaxed Foreign Direct Investment (FDI) rules in many sectors, including single brand retail, coal and lignite mining, contract manufacturing and digital media. It also decided to open 75 medical colleges which will add at least 15,700 MBBS seats in the country.
Briefing reporters on the decisions taken by the Union Cabinet headed by Prime Minister Narendra Modi, Commerce and Industry Minister Piyush Goyal said 100 per cent FDI under automatic route in coal mining and associated infrastructure has been approved.
To boost domestic manufacturing, 100 per cent FDI in contract manufacturing under automatic route has been allowed, he said, adding that 26 per cent FDI has been allowed in digital media.
On FDI in single-brand retail, the Cabinet has expanded the definition of mandatory 30 per cent domestic sourcing norm. It also allowed single-brand retailers to start online sales, waiving the previous condition of setting up a mandatory brick-and-mortar store, said Goyal.
“The changes in FDI policy will result in making India a more attractive FDI destination, leading to benefits of increased investments, employment, and growth,” Goyal told a media briefing after the meeting of the Union Cabinet.
He said 100 per cent FDI under automatic route in coal mining and sale of coal as also associated infrastructure activity has been allowed to help attract international players to create an efficient and competitive coal market.
“Easing local sourcing norms for FDI in Single Brand Retail Trading (SBRT) was announced in Union Budget Speech of Finance Minister. This will lead to greater flexibility and ease of operations for SBRT entities, besides creating a level playing field for companies with higher exports in a base year. In addition, permitting online sales prior to opening of brick and mortar stores brings policy in sync with current market practices. Online sales will also lead to creation of jobs in logistics, digital payments, customer care, training and product skilling.
“The above amendments to the FDI policy are meant to liberalise and simplify the FDI policy to provide ease of doing business in the country, leading to larger FDI inflow and thereby contributing to growth of investment, income and employment,” said the statement issued by the Government.
The FDI policy provides that 30 per cent of value of goods has to be procured from India if SBRT entity has FDI more than 51 per cent. Further, as regards local sourcing requirement, the same can be met as an average during the first five years, and thereafter annually towards its India operations. With a view to provide greater flexibility and ease of operations to SBRT entities, it has been decided that all procurements made from India by the SBRT entity for that single brand shall be counted towards local sourcing, irrespective of whether the goods procured are sold in India or exported.
Further, the current cap of considering exports for five years only is proposed to be removed, to give an impetus to exports, it added, detailing the changes in the single brand FDI norms.
FDI is a major driver of economic growth and a source of non-debt finance for the economic development of the country.
The Government has put in place an investor-friendly policy on FDI, under which investment up to 100 per cent is permitted on the automatic route in most sectors/activities.
These reforms have led to total FDI into India reaching USD 286 billion in five years from 2014-15 to 2018-19 as compared to USD 189 billion in the previous five-years, he said. At USD 64.37 billion.
FDI in 2018-19 is the highest ever investment received for any financial year.
Presently, 100 per cent FDI under automatic route is allowed in coal and lignite mining for captive consumption in power projects, iron and steel and cement units. Now, the same has been allowed for sale of coal and mining, including associated processing infrastructure such as coal washery, crushing, coal handling, and separation (magnetic and non-magnetic).
While the extant FDI policy provides for 100 per cent investment under automatic route in the manufacturing sector, there was no specific provision for contract manufacturing in the policy.
In order to provide clarity on contract manufacturing, it has been decided to allow 100 per cent FDI under automatic route in India as well, Goyal said.
With a view to providing greater flexibility and ease of operations, the Union Cabinet decided that all procurement made from India by such entity for that single brand shall be counted towards local sourcing, irrespective of whether the goods procured are sold in India or exported.
Further, the current cap of considering exports for 5 years only is proposed to be removed to give an impetus to exports. While the extant FDI policy provides for 49 per cent FDI under approval route in up-linking of News & Current Affairs TV channels, the Cabinet has decided to permit 26 per cent FDI under government route for uploading/ streaming of news and current affairs through Digital Media on the lines of print media/
The Cabinet Committee on Economic Affairs (CCEA) approved setting up of 75 Government medical colleges, to be attached with existing district or referral hospitals, by 2021-22. The establishment of these medical colleges will add at least 15,700 MBBS seats in the country. The total cost of this project is Rs.24,375 crore.
The medical colleges will be set up in under-served areas having no such institutes. These medical colleges will to attached with district hospitals having at least 200 beds, a government statement said. Preference will be given to ‘aspirational districts’ and district hospitals having 300 beds, it said,
The move comes days after Prime Minister Narendra Modi said that with rising awareness about healthcare, rising incomes and greater focus on aspirational goals among people, thousands and thousands of doctors will be needed to fulfil the demand, especially in rural and urban areas.
The establishment of new medical colleges will be under phase III of the ongoing Centrally sponsored scheme, Pradhan Mantri Swasthya Suraksha Yojna (PMSSY) which will add at least 15,700 MBBS seats in the country. The plan will cost the exchequer almost Rs 24,375 crore
There are currently 70,978 MBBS seats in 529 colleges in India.
The new medical colleges would be set up in under-served areas having no medical colleges, with district hospitals having at least 200 beds, a government statement said.
“The establishment of new medical colleges, to be attached with existing district and referral hospitals, would lead to an increase in the availability of qualified health professionals, improve tertiary care in government sector, utilise existing infrastructure of district hospitals and promote affordable medical education in the country,” it said.
The Cabinet also approved Rs 6,268 crore subsidy for export of 6 million tonnes of sugar during the next marketing year starting October to offload surplus domestic stock and help mills clear huge sugarcane arrears of around Rs 15,000 crore.
“We have taken an important decision in the interest of sugarcane farmers. The cabinet has approved export subsidy for 6 million tonnes for the 2019-20 marketing year (October-September),” Information and Broadcasting Minister Prakash Javadekar told reporters after the Cabinet meeting.
A lump-sum export subsidy of Rs 10,448 per tonne will be given to sugar mills during the next marketing year which is estimated to cost the exchequer Rs 6,268 crore, he said.
This will benefit millions of farmers in Uttar Pradesh, Maharashtra and Karnataka as well as other states, he added.