In June last year, the government had relaxed FDI norms in single-brand retail, civil aviation, airports, pharmaceuticals, animal husbandry and food products.
The Centre had allowed up to 100 per cent FDI in defence through the approval route, 100 per cent FDI in greenfield pharma via the automatic route, 100 per cent in brownfield pharma — of which, 74 per cent will be through automatic route— 100 per cent FDI in scheduled airlines and up to 49 per cent FDI in airlines through automatic route.
The government may also be looking to include the contentious multi-brand retail segment to this list.
This may be done by allowing food retailers to generate around 20-25 per cent of their sales from non-food items such as kitchen-use products or basic household requirements like toothpaste.
Currently, FDI in multi-brand retail trading is permitted, subject to a range of stipulations. A total 100 per cent FDI is allowed in stores that sell only made-in-India food products or locally produced farm goods.
Apart from Amazon, which has committed to invest $515 million over the next five years, there have been no takers for the food retail business so far. Also, with the dismantling of the Foreign Investment Promotion Board (FIPB), the entire policy architecture governing FDI also needs to be reviewed.
The rationale behind the move is that most FDI is now on the automatic approval trajectory. Only an estimated seven - eight per cent of all sectors are under the approval route.
Commerce and Industry Minister Nirmala Sitharaman had hinted in the absence of FIPB, departmental regulators might suffice to decide.
On the other hand, Abhishek believes administrative departments could also be considered for taking the final call.