CITU opposes move to allow 49 per cent FDI in Air India

Indian prime minister Narendra Modi relaxed foreign investment rules this week ahead of his visit to Davos this month. Reuters

Indian prime minister Narendra Modi relaxed foreign investment rules this week ahead of his visit to Davos this month. Reuters

Swadeshi Jagran Manch, the RSS economic wing has strongly opposed the decision of the Union Cabinet allowing 100% FDI under automatic route for Single Brand Retail Trading (SBRT) and Construction Development.

It will now become easier for ventures such as Tata-Singapore Airlines and other domestic carriers to rope in foreign partners to bring in more funds for bidding. The move to allow foreign investment in Air India comes at a time when the government is working on the modalities for strategic disinvestment of the loss- making Air India and is expected to attract more bidders for the airline. And to expedite such privatisation move, the government has now made this announcement of permitting 49 per cent FDI.

A cabinet meeting chaired by Indian Prime Minister Narendra Modi on Wednesday paved the way for 100-percent foreign investment in single-brand retail and construction development.

The amendments are meant to liberalise and simplify the FDI policy so as to provide ease of doing business.

"Foreign investment (s) in Air India including that of foreign airline (s) shall not exceed 49 per cent either directly or indirectly substantial ownership and effective control of Air India shall continue to be vested in Indian National", the statement said.

Overseas investment policy has also been liberalised in case of power exchanges, an online platform where electricity is traded.

This is the second major liberalisation in FDI policy by the NDA government in one go after major changes effected in June 2016. However, foreign investors' purchases were restricted to the secondary market only.

"It has been chose to permit single brand retail trading entity to set off its incremental sourcing of goods from India for global operations during initial five years, beginning April 1 of the year of the opening of first store against the mandatory sourcing requirement of 30% of purchases from India", the statement said.

The move should generate employment and give Indian consumers access to several global brands.

It is obvious that it is the slowing of the economy, post-demonetisation, that has prompted the government to accelerate the process of divestment and liberalise FDI norms on a large scale. "This remains an unfinished agenda".

Single-brand retail has been open to 100% FDI since 2011; the main draw for investors will be multi-brand retail-this has been pending due to a fear of retaliation from kirana store owners.

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