Government mulls easing sectoral restrictions to attract more FDI

On imported goods, MRP can be fixed only in a bonded area and this norm increases transaction cost for a foreign player.

By: PTI | New Delhi | Updated: October 28, 2016 8:27 pm
FDI, Foreign Direct investment, India FDI, FDI sector restrictions, India commerce, India industry, news, latest news, India news, national news, India economy Sources said that these conditions increase transaction cost of foreign retailers and these need to be relooked. (Source: Reuters)

The government is considering easing sectoral restrictions in segments like retail trading for foreign players to facilitate greater FDI in the country. The commerce and industry ministry is expected to discuss the sector specific issues with the departments and ministries concerned, sources said.

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In retail trading sector, some clauses in the Legal Metrology (Packaged Commodities) Rules, 2011, are hampering overseas investments in the segment, they said. As per these rules, putting maximum retail price (MRP) on all the products is mandatory and re-labeling of goods is also not allowed as re-labeling comes under the definition of manufacturing.

On imported goods, MRP can be fixed only in a bonded area and this norm increases transaction cost for a foreign player. Sources said that these conditions increase transaction cost of foreign retailers and these need to be relooked.

“There are similar issues in other sectors as well. The whole idea is to ease sectoral restrictions to facilitate FDI in the country,” they added. The government had earlier relaxed the FDI policy in November last year.

In June this year, it lifted certain restrictions in over a dozen sectors, including civil aviation, food processing, defence and pharmaceuticals. DIPP Secretary Ramesh Abhishek has recently stated that the government is trying to address specific policy issues in various sectors.

“We are also trying to address specific policy issues in various sectors. We have identified a number of them that remain despite liberalisation in FDI (policy). There could be issues in various sectors,” he had said. FDI in 2015-16 grew 29 per cent to USD 40 billion.