The government Friday proposed relaxation in the FDI norms for sectors such as aviation, insurance, animation media and single brand retail with a view to attract more overseas investment.
Finance Minister Nirmala Sitharaman in her Budget speech said that India's FDI inflows in 2018-19 grew by 6 per cent to USD 64.37 billion.
"I propose to further consolidate, the gains in order to make India more attractive FDI destination. The government will examine suggestions of further opening up of FDI in aviation, media ( AVGC - Animation, Visual effects, Gaming and Comics) and insurance sectors in consultation with all stakeholders," she said.
The minister said 100 per cent foreign direct investment (FDI) will be permitted for insurance intermediaries, and local sourcing norms will be eased for FDI in single brand retail sector.
Insurance intermediaries includes broking, third party administrators, surveyors and loss assessors.
The announcement has paved the way for entry of foreign firms in these intermediary services to operate in India.
Currently, as per the FDI policy, 49 per cent foreign investment is allowed in the insurance sector, which includes insurance broking, insurance companies, third party administrators, surveyors and loss assessors.
Representations have been made to the government that insurance brokers should be treated on par with other financial services intermediaries, where 100 per cent FDI is permitted.
Insurance penetration in the country was 3.4 per cent in 2015 against the world average of 6.2 per cent. In 2014, it was 3.3 per cent in India.
There is no mention about animation and gaming media in the current FDI policy.
According to sources, generally it is perceived that sectors which are not mentioned in the policy can attract 100 per cent foreign inflows.
Now, as the finance minister has announced to examine opening up of FDI in AVGC (animation, visual effects, gaming and comics), the commerce and industry ministry would work out the modalities in consultation with stakeholders to give effect to the announcement.
In the insurance sector, 49 per cent FDI is permitted through automatic route subject to approval from Insurance Regulatory & Development Authority of India.
Foreign investments are considered crucial for India, which needs around billions of dollars for overhauling its infrastructure sector such as ports, airports and highways to boost growth.
FDI helps improve the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar.
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