Budget 2019 : FDI in India

The Central Government of India has proposed a relaxation in the FDI norms for the various sectors like the media, aviation, insurance and single brand retail.

This will allow these sectors to attract more overseas investment. Earlier, in the budget, it was stated by the Finance Minister of India, Nirmala Sitharaman that the quantum of FDI in India has increased to USD 64.37 billion. This is an increase of 6% over the past year.

What may change?

  • 100% FDI may be also allowed in the various intermediaries of insurance. Insurance brokers currently, do not benefit FDI as much as other insurance sectors where 100% FDI is permitted.
  • The FDI may help increase the Insurance penetration in the country which is below the global average.
  • For single-brand retail, local sourcing norms may be eased for firms with FDI.
  • Currently, 26 % FDI is allowed (only with government approval) in the publishing of newspaper and periodicals dealing with news and current affairs, publication of Indian editions of foreign magazines in news and current affairs.

Why FDI is important?

The FDI brings in foreign investments which are essential for India. India needs billions of dollars to overhaul and improve its infrastructure sector and construct new ports, airports, and highways to boost connectivity and the economy. The FDI also helps improve the country’s balance of payments (BoP) situation and strengthens the rupee’s value against other global currencies, especially the US dollar.

 

 

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