Cabinet May Ease FDI Norms In Single-Brand Retail, Local Sourcing Norms, Insurance And Contract Manufacturing

The central government is likely to ease foreign direct investment (FDI) norms further and the cabinet is expected to give its approval to relaxed norms in single-brand retail trade and insurance sectors shortly.

According to proposals under consideration, the insurance sector could be opened up to 74% to FDI under the approval route to bring parity with the banking sector. The current 49% foreign investment limit through the automatic route in the insurance sector is likely to be maintained.

However, 100% FDI is likely to be permitted in insurance intermediaries like brokers, insurance repositories, and third-party administrators.

The contract manufacturing sector could also benefit from the expected relaxation in FDI norms. The

current policy does not talk about contract manufacturing separately and the lack of a clear definition in the current policy is an area the government is likely to clarify shortly.

It may be noted that the government had clarified that it intended to further relax FDI norms in several sectors.

Earlier this year, Commerce and Industry Minister Piyush Goyal had stated that the government was exploring ways to allow foreign investors in single-brand retail to meet their 30% mandatory local sourcing requirement through other ways.

In the recent union budget, Finance Minister Nirmala Sitharaman had also signalled that FDI reforms in aviation as well as multimedia sectors like animation, gaming, digital media, and information utilities, could be relaxed.