Cabinet takes key FDI decisions ahead of Budget: Here's all you need to know

New Delhi: The Union Cabinet chaired by Prime Minister Narendra Modi, has given its approval to a number of amendments in the FDI Policy.

The approval in FDI policy aims to provide ease of doing business in the country which in turn will lead to larger FDI inflows contributing to growth of investment, income and employment.

This is the second major liberalisation in FDI policy by the NDA government in one go after major changes effected in June 2016.

Finance Minister Arun Jaitley is scheduled to present the Union Budget for 2018-19 on February 1.

Here are the major decisions taken by the Union Cabinet

• In a move that will give a boost to foreign retailers like Ikea, Walmart and Carrefour, the Cabinet approved 100 percent FDI under the automatic route for single brand retail trading. Earlier also 100 percent FDI was allowed in the segment, but it required government approval.
• Cabinet has allowed foreign airlines to now own up to 49 percent stake in national carrier Air India. While allowing foreign airlines to have stake in Air India, the government has also made it clear that the national carrier's substantial ownership would remain with Indian nationals.
• The Cabinet has relaxed foreign direct investment (FDI) policy for medical devices and audit firms associated with companies receiving overseas funds.
• Overseas investment policy has also been liberalised in case of power exchanges. Currently, the policy provides for 49 percent FDI under automatic route in power exchanges. However, FII/FPI purchases were restricted to secondary market only. Cabinet has decided to do away with this provision, thereby allowing FIIs/FPIs to invest in Power Exchanges through primary market as well.
• Cabinet has approved liberalisation in the construction development segment clarifying that real-estate broking service does not amount to real estate business and is therefore, eligible for 100 percent FDI under automatic route.
• The Cabinet has approved the implementation of an earlier CCEA decision on closure of Tungabhadra Steel Products Ltd (TSPL) regarding disposal of its immovable assets. The development also provides for getting the name of TSPL removed from the Registrar of Companies after setting balance liabilities of the company.
• Cabinet has decided that issue of shares against non-cash considerations like pre-incorporation expenses, import of machinery etc. shall be permitted under automatic route in case of sectors under automatic route.
• The Cabinet also relaxed foreign direct investment (FDI) policy for medical devices and audit firms associated with companies receiving overseas funds.
• The Cabinet Committee on Economic Affairs has approved the proposal to continue the MPLAD Scheme beyond the 12th Plan period (2012-17) up to March 31, 2020. The CCEA has given its approval for the continuation of the Members of Parliament Local Area Development Scheme (MPLADS) till the term of the 14th Finance Commission, March 31, 2020.