The Indian government should open its insurance and aviation industries to foreign investors, in an attempt to revitalize a slowing economy.
The Ministry of Finance proposed to increase from the current level of 49 percent to 74 percent the ceiling on foreign direct investment in Indian insurance and pension firms.
Furthermore, the government wants to have Indian carriers owned by foreign airlines. Easing FDI restrictions in the aviation sector could potentially help attract buyers for beleaguered national carrier Air India, which the government has been trying to sell off.
The government is also considering a buyer for Jet Airways, a Mumbai-based international air carrier that has been grounded since its bankruptcy filing in April 2019.
However, government rules currently bar any foreign investor from taking control of an Indian airline that has a two-thirds board of Indian members.
The ministry would also like to encourage more FDI to manage railroads, education, and rental housing companies. (The FDI is officially banned on Indian trains).
The government is also looking to sell its second-largest state refiner, Bharat Petroleum Corp., as well as Shipping Corp. of India Ltd., the country's largest shipping company.
Last year the Indian government loosened foreign investment policies in retail, manufacturing and coal mining sectors to attract foreign investment.
FDI actually accounts for less than 2% of Indian gross domestic product, which is what the government wants to increase to 6%.
For the six months ended September 2019–the first half of the current fiscal year–FDI inflows to India rose to $26 billion by 15 per cent.
With $8 billion in investment into India, Singapore was the single largest source of FDI. Mauritius followed Singapore ($6.36 billion), the US ($2.15 billion), the Netherlands ($2.32 billion) and Japan ($1.78 billion).
The largest foreign inflows were earned by education ($4.45 billion), computer software and hardware ($4 billion), telecommunications ($4.28 billion), and automobiles ($2.13 billion).
Guruprasad Mohapatra, secretary of the government's Department of Industry Promotion and Internal Trade, said FDI inflows have not been impacted by a slowdown in global economy.
"FDI growth this year has been very strong and I am quite optimistic that India's FDI story will continue unabated with these policies and initiatives and keep growing at a healthy rate," said Mohapatra.
Tags : Indian government, gross domestic product, FDI, Department of Industry Promotion and Internal Trade,