Why in the news ?

• The Union Cabinet tweaked foreign investment rules, eased FDI norms in Air India, Single Brand Retail Trading and In Real Estate among others.

Air India

1. foreign investment(s) in Air India, including that of foreign airline(s), shall not exceed 49% either directly or indirectly and
2. substantial ownership and effective control of Air India shall continue to be vested in an Indian national.

• According to the current  policy, foreign airlines are allowed to invest under the government approval route in the capital of Indian companies operating scheduled and non­scheduled air transport services, up to the limit of 49% of their paid­-up capital. However,  this provision was not applicable to Air India, which is no longer is the case now as Air India is on a par with other Indian airline operators with respect to FDI norms.
• Centre for Asia Pacific Aviation (CAPA) India, in October 2017, recommended that the government exit Air India completely.
• The Parliamentary Standing Committee on Transport, Tourism and Culture, in a draft report, is said to have described Air India as a “national pride” and urged that the airline be “given a chance for at least five years to revive.”
• The Cabinet Committee on Economic  Affairs (CCEA), at its meeting on June 28, 2017, gave in-­principle approval for considering strategic disinvestment of Air India and its five subsidiaries as well as the constitution of the Air India Specific Alternative Mechanism.
• The move may pave the way for Indian players to join hands with foreign entities in bidding for the debt ridden Air India.
• CAPA anticipates that the divestment would help spur more jobs and growth in Air India.

Single Brand Retail Trading (SBRT)

• Centre also  liberalised and simplified the FDI norms in Single Brand Retail Trading (SBRT) sector.
• Centre gave its approval to a proposal permitting 100% FDI under the automatic route for SBRT.
• The Centre also eased ‘sourcing norms’ in SBRT by permitting companies to set of their incremental sourcing of goods from India for global operations in the initial five years.
• Beginning April 1 of the year of the opening of the firm’s first store — against the mandatory sourcing requirement of 30% of purchases from India.
• After the completion of the five ­year period, SBRT entities would be required to meet the 30% sourcing norms directly towards its India’s operation, on an annual basis.
• The move is likely to  attract additional foreign capital into the country and will also provide an impetus to the retail industry growth, at a time when organised retail is already seeing strong growth over the last 12 months
• The relaxation in local sourcing norms would allow the SBRT entity adequate time to set up their supply chain for local souring in India.

What is Single Brand Retail And Multi Brand Retail ?

• Single Brand Retail: Where a business sells goods to individual customers (not other businesses) and such goods are all sold under the same brand.

  Example - Nike sets up stores in India in which the foreign parent of Nike (Nike Inc.) invests. Such stores can only sell Nike products under the 'single brand' route.

• Multi-Brand Retail: Where a business sells goods to individual customers and such goods can carry several different brands.

  Example - TESCO or Walmart (or other department store type retailers), which stock and sell goods from various different brands in their stores.

Real estate

• The government has also decided to introduce few changes in foreign direct investment (FDI) regime in construction development sector.
• In construction development, the Centre said that real estate broking service did not amount to ‘real estate business’ and was, therefore, eligible for 100% FDI under the automatic route. 

Source

·         The Hindu, Indian Express and Economic Times.