Ahead of Budget, Centre relaxes FDI norms in airlines, retail, construction

BUDGET 2018 - In big bang FDI reforms ahead of the budget, the government on Wednesday permitted foreign airlines to invest up to 49 per cent in debt-ridden Air India, and eased norms for investment in single brand retail, construction and power exchanges.

The government also relaxed foreign direct investment (FDI) policy for medical devices and audit firms associated with companies receiving overseas funds.

The decisions were taken by the Union Cabinet headed by Prime Minister Narendra Modi here.

In a move that will give a boost to foreign retailers like Ikea, the government approved 100 per cent FDI under the automatic route for single brand retail trading. Earlier also 100 per cent FDI was allowed in the segment, but it required government approval.

"The Union Cabinet ... has given its approval to a number of amendments in the FDI Policy. These are intended to liberalise and simplify the FDI policy so as to provide ease of doing business in the country.

"In turn, it will lead to larger FDI inflows contributing to growth of investment, income and employment," the government said in a statement.

The decision to allow foreign airlines to invest up to 49 per cent under approval route in Air India comes in the backdrop of government's plans to disinvest the state-owned carrier.