Good Morning, Swarajya Readers! Here’s What You Need To Know Today.

BIG BANG IN FDI



The NDA Government yesterday announced the second biggest overhaul of FDI rules since it liberalised 15 sectors in November last year. With these changes, India is now the most open economy in the world for FDI, the govt notification declared. Here’s a look at major changes in different sectors.



Defence. UCurrently, upto 49% equity participation in Indian defence companies is allowed through the automatic route. Anything above that would be allowed by the govt only if it feels we would get ‘state of the art technology’. Today, it has decided to do away with the ‘state of the art technology’ criteria and has made upto 100% FDI in defence possible through the govt approval route.



Pharmaceuticals. The existing policy allows 100% FDI in greenfield (entirely new) pharma facilities and upto 100% FDI in brownfield (old) pharma under the govt approval route. The new policy would now allow upto 74% FDI in brownfield pharma under the automatic route with investments beyond 74% under the govt approval route.



Civil Aviation Sector. Currently, up to 49% FDI is allowed under the automatic route in domestic airlines. It has now been decided to raise this limit to 100%, with FDI up to 49% permitted under automatic route and FDI beyond 49% through government approval.



Single Brand Retail Trading. Under the new policy, local sourcing norms will be relaxed for all brands for the first three years. The norms will be relaxed for five years for brands with ‘state of the art’ and ‘cutting edge technology’. However, ambiguities remain as to what is the criteria for the classification of a technology as cutting-edge.



Other areas. 100% FDI will now be allowed under the automatic route for DTH, Cable Networks, Mobile TV and Cable Networks.



100% FDI under the automatic route will also be allowed in Animal Husbandry, Pisciculture, Aquaculture and Apiculture without the rider of ‘under controlled conditions’.



100% FDI will now be allowed with government approval in trading (including via e-commerce) of food products produced in India.



FDI inflows in the country have seen a jump from $34 billion in 2014-2015 to $55 billion in 2015-2016. The new reforms announced yesterday will further swell the govt’s coffers.

INDIA AND BREXIT



All countries, big and small, world leaders and financial institutions alike are opposing Britain’s exit or Brexit from the European Union. The UK is equally divided in ‘Leave’ and ‘Remain’ camps, each category tied at 44% in polls.



But what it means for India? Prime Minister Narendra Modi has hintedmultiple times that India would prefer if Britain didn’t leave the EU. He has called the UK India’s gateway to the Europian Union.



While everyone is predicting a doomsday scenario, Brexit may be good for India’s tech services industry. Sidharth Pai writes in Livemintthat while a leave vote would likely cause problems to the free flow of labour, telecommunications will make sure that the free flow of technology-based work isn’t hindered. While unclogging a sewer line needs a local presence, processing insurance claims or working on the opening of bank accounts doesn’t.

“These processes constitute work packets that can simply be unbolted and shipped offshore, most likely to India, where Britain is the second largest market after the US for India based business process outsourcing (BPO) and information technology (IT) services providers,” he says.

COASTAL SHIPPING



The Central govt may offer companies an incentive of Rs 1 per tonne per km to transport goods through inland waterways and coastal shipping. Barely 6% of freight transported in India is carried by coastal shipping and inland waterways. The govt wants to increase it to 10%.



It expects that the incentive will cost it Rs 100-150 crore per year. However, it would result in potential savings of Rs 35,000-40,000 crore in a decade by optimizing export-import freight and domestic cargo.

GOOD GOVERNANCE



The government may soon bring a bill that would mandate that citizens get government services on time and their grievances are disposed of within a specified time frame. ‘Delivery of Services and Redressal of Public Grievances’ bill is currently being designed and will pertain to central ministries and departments.



The UPA government had also introduced a similar bill, ‘Right of Citizens for Time-Bound Delivery of Goods and Redressal of Grievances’ but it has already lapsed in the Parliament.