As announced in the budget of 2017 by Mr Arun Jaitley the Finance Minister of India, Government of India is planning to encourage more foreign investment by simplifying the procedures and relaxing the limits in various sectors in the year starting from 1st April. This endeavor is to help the country to regain its lost position as the world’s fastest growing major economy.
Now there are two routes of Foreign Investment available in India, namely automatic and Foreign Investment Promotion Board (FIPB) route. In the budget speech Finance Minister announced that they are going to remove FIPB system and planning to bring a simpler mechanism. This action is taken because of the delays contributed by FIPB in according clearance to various large scale projects, which discouraged the foreign investors to Invest in India. Automatic route is the route for foreign investment in India, in the sectors where there is no Cap for Foreign investment and in the sectors which are not reserved. All other investment proposals required FIPB approval. Now the government is simplifying for foreign companies to get permission and could request ministries to clear investment proposals faster. Economic affairs secretary Mr. Shaktikanta Das said in an interview in New Delhi on Friday confirmed the same.
India and China are renewing a push for globalization at a time when the major economies like UK and US are turning increasingly becoming protectionist countries, recently. India feels that India, China, the other Asian economies like Japan can support each other to create jobs and maintain growth. FDI inflows to India between April-September rose 31% from a year earlier to $21.7 billion, finance minister Arun Jaitley reported to parliament a few days back. That’s still a fraction of roughly $118 billion received by China in 2016.
The Government of India is keen to lure foreign capital into India to boost the economic growth of India that’s slowed down to 7.1% in the year ending 31 March after hitting eight percent last year. The effort to boost the economic growth suffered a severe blow after the government withdrew high denomination banknotes in an economy where large portion of consumer commercial transactions are done in cash.
There are many foreign investment caps in over a dozen sectors ranging from banking to defense manufacturing which are often cited as barriers to investment in world’s second most populous country. Apple Inc. from USA has decided to begin making iPhones in India by the end of April 207 after a prolonged negotiation over the relaxation of a rule that requires single-brand retailers to source 30% of components from within India. This is expected to draw attention of the Global investors and multinational Companies to turn towards India and increase their commercial activities in India.
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