FDI in Retail, Digital Media : Cabinet to consider relaxing norms today

New Delhi: The Union Cabinet on Wednesday will consider relaxing foreign direct investment (FDI) norms in several sectors, including single-brand retail and digital media, to attract overseas players, sources said.

Other sectors where FDI rules would be eased are coal mining and contract manufacturing. The government may approve proposal to allow 100 per cent FDI in contract manufacturing, they said.

In the existing foreign investment policy, 100 per cent foreign direct investment is permitted in the manufacturing sector under the automatic route. A manufacturer is also allowed to sell products manufactured in India through wholesale and retail channels, including through e-commerce, without the government's approval.

But, the policy does not talk about the contract manufacturing and it is not clearly defined in the policy. "Big technology firms across the world are going for this, so there is a need for clarification on the matter," the sources said.

Commenting on the proposal, L Badri Narayanan, Partner, Lakshmikumaran & Sridharan Attorneys, said that the move if approved would give an impetus to the manufacturing sector, which is riddled with grey areas.

"If the manufacturing entity is proposed to be allowed to have foreign investment, the same appears to be in line with the principles already set out in the FDI policy," Narayanan said. Similarly, the government is looking at coming out with a clarification on applicability of the foreign direct investment policy on the digital media sector.

The present FDI policy is silent on the fast-growing digital media segment. In the print media sector, 26 per cent FDI is allowed through government approval route. Similarly, 49 per cent is permitted in broadcasting content services through government approval route.