100 per cent FDI in marketing food products

The Union Budget on Monday proposed significant liberalisation of FDI norms in a host of sectors, including insurance, pension, ARCs and stock exchanges.

Foreign investment will be allowed in the insurance and pension sectors in the automatic route up to 49 per cent subject to the extant guidelines on Indian management and control to be verified by the regulators.

Earlier, foreign investment up to 26 per cent was allowed through automatic route. Similarly, 100 per cent FDI in Asset Reconstruction Companies will be permitted through automatic route. Earlier it was allowed only up to 49 per cent.

Investment limit for foreign entities in Indian stock exchanges will be enhanced from five to 15 per cent on par with domestic institutions. This will enhance global competitiveness of Indian stock exchanges and accelerate adoption of best-in-class technology and global market practices.

The existing 24 per cent limit for investment by foreign portfolio investors in Central public sector enterprises, other than banks, listed in stock exchanges, will be increased to 49 per cent to obviate the need for prior approval of government for increasing the FPI investment.

With a view to promote Make in India and following the practices in advanced countries, foreign investors will be accorded residency status subject to certain conditions. Currently, these investors are granted business visa only up to five years at a time.

“Our FDI policy has to address the requirements of farmers and food processing industry. A lot of fruits and vegetables grown by our farmers either do not fetch the right prices or fail to reach the markets. Food processing industry and trade should be more efficient. 100 per cent FDI will be allowed through FIPB route in marketing of food products produced and manufactured in India,” said finance minister Arun Jaitley while presenting the Budget.

This will benefit farmers, give impetus to food processing industry and create vast employment opportunities.

In order to ensure effective implementation of bilateral investment treaties signed by India with other countries, the minister proposed to introduce a “Centre state investment agreement”.

“This will ensure fulfilment of the obligations of the state governments under these treaties. States which opt to sign these agreements will be seen as more attractive destinations by foreign investors,” he added. The basket of eligible FDI instruments will be expanded to include hybrid instruments subject to certain conditions, the finance minister said.