The government proposes the relaxation of the FDI regulation in the media, aviation, insurance, retail trade of a single brand
NEW DELHI: The government proposed relaxation on Friday IED standards for sectors such as the media, aviation, insurance and retail trade of a single brand with a view to attracting more foreign investment.
Finance Minister Nirmala Sitharaman in his Budget speech said that India's IED inflows in 2018-19 grew by 6 per cent to $ 64.37 billion.
I propose to further consolidate, the gains in order to make India more attractive IED destination. The government will examine suggestions of further opening up of IED in aviation, media, AVGC (Animation, Visual Effects, Gaming and Comics) and insurance sector in consultation with stakeholders, she said.
The minister said 100 per cent foreign direct investment (IED) will be permitted for insurance intermediaries, and local sourcing norms will be eased for IED in single brand retail sector.
Currently, as per the IED policy, 49 per cent foreign investment is allowed in the insurance sector, which includes insurance broking, insurance companies, third party administrators, surveyors and the assessors.
Representations have been made to the government that insurance brokers should be treated with other financial intermediary services, where 100 per cent IED is permitted.
Insurance penetration in the country was 3.4 percent in 2015 compared to the world average of 6.2 percent. In 2014, it was 3.3 percent in India.
Similarly, 26 per cent IED is permitted in the newspaper and newspaper dealing with news and current affairs; and publication of Indian editions of foreign magazines in news and current affairs.
Foreign investments are considered crucial for India, which needs billions of dollars to renew its infrastructure sector, such as ports, airports and highways, to boost growth.
IED helps improve the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar.