FDI boost may fuel aviation, give Apple a bite of the local market

NEW DELHI: The government on Friday announced easing of foreign direct investment rules for insurance intermediaries such as brokers and local sourcing norms for single-brand retail, a move that may encourage companies such as Apple to finally open stores in India.
Besides, it announced a review of the norms to further open up FDI in aviation, insurance and media (animation, visual effects, gaming and comics) to provide a fillip to foreign flows into the country.While the details are yet to be discussed in detail, sources indicated the proposal may include allowing foreign airlines more shareholding power in Indian carriers. This will help sustain domestic players, some of which such as Jet Airways and Kingfisher were forced to shut shop as they could not get global investors.
Similarly, in case of insurance, the details are yet to be worked out for the sector where 49% foreign investment is currently allowed. Industry players have made a case for 100% FDI for insurance brokerages, which they have argued should be treated at par with other financial services intermediaries.
While these are sectors where clarity will emerge only in the coming months, there appears to be greater clarity on local sourcing norms for single-brand retail sector, where companies such as Apple have been pitching for easier norms. These firms want that the 30% mandated sourcing requirement from domestic players should include the purchase they make for exports. With the government keen to get large entities to step up manufacturing and retail base, the relaxation is seen as a step towards that.
“We’ll issue the required clarifications in the coming weeks but the basic sourcing requirement will not be lowered,” said an officer.
The government believes that rapid economic growth and a large market that offers high returns make India an attractive destination for foreign investors. And, to tap into the interest, it is now lining up an annual Investors Meet, which may be similar to Vibrant Gujarat but on a much larger scale.