In a recent development, the Government of India (“GOI”) has pushed through the move to allow foreign direct investment (“FDI”) in multi-brand retail. This will allow global retail giants like WalMart to set up deep-discount stores in India. However, GOI has allowed state governments to decide whether to allow FDI in multi-brand retail or not. Further, FDI in multi-brand retail has come with many pre-conditions such as (a) the minimum FDI limit has been set at $100 million, (b) half of any investment has to made in infrastructure like cold-storage chains and warehouses and (c) at least 30 per cent of the goods to be sold will have to be sourced from local producers.
GOI had last year cleared 51 per cent FDI in multi-brand retailers for cities with populations of more than a million. But it had to rollback that decision after huge protests.
GOI also relaxed norms for FDI in the aviation sector, allowing international airlines to invest in domestic peers. Global airlines can now invest up to 49 per cent in the aviation sector. Previous FDI rules allowed foreign entities other than airlines to own, directly or indirectly, an equity stake of up to 49 per cent in Indian carriers.
Relaxing FDI norms in aviation is expected to help provide much-needed cash flow to India's bleeding private airlines.
In relation to all of the above, it is to be noted that the official notification(s) will give us further details on these new developments.