After taking significant measures to facilitate Foreign Direct Investment (FDI) in November 2015 and June 2016 and dismantling the Foreign Investment Promotion Board (FIPB) earlier this year, the Government of India seems to be moving towards further liberalisation in certain important sectors. These sectors could include construction, print media and retail trading.

The government has been facing challenges on job creation front, hence there is likely to be greater thrust on more economic and industrial activity including FDI liberalisation.

Multi-brand retailing has been a contentious sector so far with respect to FDI rules. The government may eventually allow 100% FDI in this sector with strict conditions like employment creation, local sourcing norms, investment in setting up of infrastructure and storage facilities (some of these are already in place even with 51% cap on FDI). With FDI limit of 51%, a foreign investor is forced to enter into a joint venture with an Indian entity and the response from foreign players has been lukewarm.

In single brand retail sector, currently only up to 49% FDI is permitted under the automatic route. This limit may be raised to 100%.

As far as construction development sector is concerned, currently FDI is permitted only in developed plots where the basic trunk infrastructure is in place. FDI rules may be tweaked to allow FDI even in undeveloped and underdeveloped plots in a project, again with certain conditions.

There was also a proposal to further liberalise FDI in print media.

Apparently, the rules may also be liberalised to allow food retailers to sell other grocery items too.

FIPB has already been abolished and the new system put in place with the Standard Operating Procedure (SOP) of processing new FDI applications out on 29 June, 2017.

These measures should facilitate more expeditious and effective inflow of FDI in India.

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