India is planning to allow more foreign investment by relaxing limits in various industries in the year starting April 1 to help regain its lost position as the world’s fastest growing major economy.
The government will make it easier for foreign companies to seek approval and could ask ministries to clear investment proposals, Economic Affairs Secretary Shaktikanta Das said in an interview in New Delhi on Friday. These steps follow the government’s decision this week to scrap the 1990-era Foreign Investment Promotion Board that was often criticised as a bureaucratic hurdle slowing projects and proposals.
“The idea is to make process the simpler and faster,” Das said declining to name industries where foreign investment limits can be relaxed. Easing of limits is under the consideration of the government, he added.
India and China are renewing a push for globalisation at a time when the UK and US are turning increasingly protectionist. With two of the world’s largest populations, the Asian economies and foreign companies need each other to create jobs and maintain sales growth.
FDI inflows between April-September rose 31% from a year earlier to $21.7bn, Finance Minister Arun Jaitley’s advisers told parliament on Tuesday. That’s still a fraction of roughly $118bn received by China in 2016.
Prime Minister Narendra Modi’s administration is trying to lure foreign capital to boost economic growth that’s set to slow to 7.1% in the year ending March 31 after hitting close to 8% last year. The effort to boost expansion suffered a blow after the government withdrew high denomination banknotes in an economy where bulk of consumer transactions are done in cash.
There are foreign investment caps in over a dozen industries from banking to defense manufacturing which is often cited as a barrier to investment in world’s second most populous country. Apple Inc is set to begin making iPhones in India by the end of April after a prolonged negotiation over the relaxation of a rule that requires single-brand retailers to source 30% of components from within India.
Das said he had no knowledge of any relaxation handed out to the maker of iPhones. The Finance Ministry did not find sufficient grounds to relax the rules for Apple to start retailing in India as the government was keen to boost local manufacturing, he said.
“I’m not aware of any such proposal that has come to the government,” Das said. “It might have come to other ministry but not to my knowledge. There is no rethink on 30% sourcing.”
An iPhone is seen on display at a kiosk at a reseller store in Mumbai. Apple is set to begin making iPhones in India by the end of April after a prolonged negotiation over the relaxation of a rule that requires single-brand retailers to source 30% of components from within India.
