Cabinet Approves 100% FDI in Space Sector, India Now Liberalised for FDI in Prescribed Space Sub-Sectors/Activities

The FDI policy reform will enhance Ease of Doing Business in the country, leading to greater FDI inflows and thereby contributing to growth of investment, income and employment

The Union Cabinet chaired by Prime Minister Shri Narendra Modi approved the amendment in Foreign Direct Investment (FDI) policy on space sector. Now, the satellites sub-sector has been divided into three different activities with defined limits for foreign investment in each such sector.

The Indian Space Policy 2023 was notified as an overarching, composite and dynamic framework to implement the vision for unlocking India’s potential in Space sector through enhanced private participation. The said policy aims to augment space capabilities; develop a flourishing commercial presence in space; use space as a driver of technology development and derived benefits in allied areas; pursue international relations and create an ecosystem for effective implementation of space applications among all stakeholders.

As per the existing FDI policy, FDI is permitted in establishment and operation of Satellites through the Government approval route only. In line with the vision and strategy under the Indian Space Policy 2023, the Union Cabinet has eased the FDI policy on Space sector by prescribing liberalized FDI thresholds for various sub-sectors/activities.

Department of Space consulted with internal stakeholders like IN-SPACe, ISRO and NSIL as well as several industrial stakeholders. NGEs have developed capabilities and expertise in the areas of satellites and launch vehicles. With increased investment, they would be able to achieve sophistication of products, global scale of operations and enhanced share of global space economy.

The proposed reforms seek to liberalize the FDI policy provisions in space sector by prescribing liberalized entry route and providing clarity for FDI in Satellites, Launch Vehicles and associated systems or subsystems, Creation of Spaceports for launching and receiving Spacecraft and manufacturing of space related components and systems.

Benefits:

Under the amended FDI policy, 100% FDI is allowed in space sector. The liberalized entry routes under the amended policy are aimed to attract potential investors to invest in Indian companies in space.

The entry route for the various activities under the amended policy are as follows:

• Upto 74% under Automatic route: Satellites-Manufacturing & Operation, Satellite Data Products and Ground Segment & User Segment. Beyond 74% these activities are under government route.
• Upto 49% under Automatic route: Launch Vehicles and associated systems or subsystems, Creation of Spaceports for launching and receiving Spacecraft. Beyond 49% these activities are under government route.
• Upto 100% under Automatic route: Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment.

This increased private sector participation would help to generate employment, enable modern technology absorption and make the sector self-reliant. It is expected to integrate Indian companies into global value chains. With this, companies will be able to set up their manufacturing facilities within the country duly encouraging 'Make In India (MII)' and 'Atmanirbhar Bharat' initiatives of the Government.

Govt considering Relaxing FDI norms in Digital Media and Single Brand

New Delhi, Aug 26 (PTI) The government will soon consider relaxing foreign direct investment (FDI) norms in several sectors, including single-brand retail trading and digital media, to attract overseas players, sources said.

Other sectors where FDI rules would be eased are coal and contract manufacturing. According to sources, the Union Cabinet would soon consider these issues for approval. The government may allow 100% FDI in contract manufacturing, according to the proposal.

In the existing foreign investment policy, 100 per cent foreign direct investment is permitted in the manufacturing sector under the automatic route. A manufacturer is also allowed to sell products manufactured in India through wholesale and retail channels, including through e-commerce, without the government's approval.

But the policy does not talk about the contract manufacturing and it is not clearly defined in the policy. "Big technology firms across the world are going for this, so there is a need for clarification on the matter," they said.

Similarly, the government is looking at coming out with a clarification on applicability of the foreign direct investment policy on the digital media sector.

The present FDI policy is silent on the fast-growing digital media segment.

In the print media sector, 26% FDI is allowed through government approval route. Similarly, 49% FDI is permitted in broadcasting content services through government approval route.

In the single-brand retail sector, the cabinet will consider a proposal of relaxing rules for complying with the mandatory 30 per cent local sourcing norms by foreign single-brand retailers.

As per the proposal, single-brand retail firms would also be permitted to open online stores before setting up brick-and-mortar shops. Currently, online sale by a single-brand retail player is allowed only after the opening of physical outlets.

Relaxations are expected in a provision where foreign retail traders are presently allowed to adjust procurement of goods from India for their global operations for meeting the mandatory local sourcing requirement.

However, "incremental" sourcing of goods from India is only taken into account presently, and it will be allowed only for five years.

"Amendments and easing are also likely in this provision," a source said.

The move comes in the backdrop of announcements made by the government in the Budget. Finance Minister Nirmala Sitharaman in her Budget speech in July had stated that the government would examine suggestions of further opening up of FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders to attract more overseas investment.

FDI in India dipped 1% to USD 44.36 billion in 2018-19.

Last year, the government had relaxed FDI rules for several sectors, including single-brand retail, non-banking financial companies and construction.

Foreign investments are considered crucial for India, which needs billions of dollars for overhauling its infrastructure sector such as ports, airports and highways to boost growth.

FDI helps in improving the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar. PTI RR

Govt to Clarify on Applicability of FDI Policy on Digital Media: Sources

The government is likely to come out with a clarification on applicability of the foreign direct investment policy on the digital media sector, official sources said. The present FDI policy is silent on the fast-growing digital media segment.

In the print media sector, 26% FDI is allowed through government approval route. Similarly, 49 per cent FDI is permitted in broadcasting content services through government approval route. But 100% is allowed for up-linking of non-news and current affairs' TV channels, and down-linking of TV channels through automatic approval route.

"In the FDI policy, digital media does not find a place. As the sector is growing fast, we are looking at it will come under FDI cap or not," a source said. The proposal is worked out by the commerce and industry ministry, sources said.

On in the proposal, Deloitte Partner Jehil Thakkar said that this is a great move by the government as it would help media companies to raise additional capital for their digital media segment.

"The government should clarify about the FDI cap in the sector and whether that FDI will be coming through automatic route or not, he said.

Thakkar added that at present a significant part of the growth in the media sector is coming from the digital area. "Additional capital is needed to keep this growth going and FDI would be the most welcoming thing in this."

Finance Minister Nirmala Sitharaman in her Budget speech in July had stated that the government would examine suggestions of further opening up of FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders with a view to attracting more overseas investment.

FDI in India dipped 1 per cent to USD 44.36 billion in 2018-19.

Last year, the government had relaxed FDI rules for several sectors, including single-brand retail, non-banking financial companies and construction.

Foreign investments are considered crucial for India, which needs billions of dollars for overhauling its infrastructure sector such as ports, airports and highways to boost growth.

FDI helps in improving the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar. PTI RR CS

In a Boost to Co.s like Apple, Govt may Permit 100% FDI in Contract Manufacturing: Sources

The government is working on a proposal to allow 100% FDI in contract manufacturing with a view to attract overseas investments, said a PTI release citing sources. Contract Manufacturing or Private Label Manufacturing refer to Production of goods by one company, under the label or brand of another.

According to the existing foreign investment policy, 100% foreign direct investment (FDI) is permitted in the manufacturing sector under the automatic route. A manufacturer is also allowed to sell products manufactured in India through wholesale and retail channels, including through e-commerce, without government's approval.

"The current policy does not talk about contract manufacturing and it is not clearly defined in the policy. Big technology companies across the world are going for this, so there is a need for a clarification on the matter which government is considering positively," they said.

The commerce and industry ministry is working on a proposal that would be finalized soon and sent for Union Cabinet's approval.

Commenting on the proposal, Rajat Wahi, Partner, Deloitte India, said the move if approved by the government will give a boost to the manufacturing sector.

"It is a welcome proposal for technology based companies like Apple," he said. Finance Minister Nirmala Sitharaman in her Budget speech in July had proposed relaxation in the FDI norms for certain sectors such as aviation, AVGC (animation, visual effects, gaming and comics), insurance, and single brand retail with a view to attract more overseas investment.

FDI in India dipped 1% to USD 44.36 billion in 2018-19. Last year, the government had relaxed FDI rules for several sectors, including single brand retail, non- banking financial companies and construction.

Foreign investments are considered crucial for India, which needs billions of dollars for overhauling its infrastructure sector such as ports, airports and highways to boost growth.

FDI helps in improving the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar. PTI RR MKJ

Govt to Examine Opening up FDI in Media, Animation, Visual effects, Gaming and Comics Industry

In the Union Budget 2019 announcement, Finance Minister Nirmala Sitharaman said in her speech that the Foreign Direct Investment (FDI) norms in the media and AVGC (Animation, Visual effects, Gaming and Comics) industry will be relaxed in consultation with the industry.

The minister said, "I propose to further consolidate, the gains in order to make India more attractive FDI destination. The government will examine suggestions of further opening up of FDI in aviation, media, AVGC (Animation, Visual effects, Gaming and Comics) and insurance sector in consultation with stakeholders," she said.

Speaking on this, Paavan Nanda, Co-Founder of an E-sports gaming platform WinZO Games, said "With its focus on job creation, start-ups, MSMEs, infrastructure, digital India and ease of business, Finance Minister Nirmala Sitharaman has presented a visionary Union Budget. The government’s proposal to relax FDI norms for the AVGC (Animation, Visual effects, Gaming and Comics) industry is a conscious move to attract additional foreign investment in the sector, which will lead to overall growth and sustenance."

"The gaming industry is transforming rapidly, fueled by enhanced connectivity, changing modes of social interaction and a growing youth population. The steps proposed by the government will help companies re-look at their strategy and tap the immense potential of the industry. This will also expedite the growth & confidence in the overall sector," he said.

Currently, 26% FDI is permitted with government approval in publishing of newspaper and periodicals dealing with news and current affairs; and publication of Indian editions of foreign magazines in news and current affairs.

The Finance Minister also announced that local sourcing norms for single brand retail sector will be eased.

Sitharaman said that India’s FDI inflows in 2018-19 grew by 6 per cent to USD 64.37 billion.

Amazon, Flipkart, Snapdeal Violate FDI rules, Alleges Traders Body

The Indian ecommerce industry is in some serious soup. India’s traders body, the Confederation of All India Traders (CAIT) has decided to call out the ecommerce industry for the rules that its players are flouting in the disguise of sales and has urged the government to look into the matter.

CAIT has reportedly written to Union Commerce Minister Suresh Prabhu urging the minister to take serious action against ecommerce biggies like Amazon, Flipkart and Snapdeal etc. for disregarding FDI (foreign direct investment) norms listed for such players by engaging in retail trading activities. In the official complaint, CAIT has claimed that the ecommerce companies are indulging in a "blatant violation" of the FDI (foreign direct investment) policy.

CAIT alleges that Amazon’s Great Indian Festival Sale from 21 September to 24 September, 2017, Flipkart’s Big Billion Day Sale from 20-24 September 2017, Snapdeal’s Unbox Diwali Sale from 20 to 25 September 2017, Jabong’s Sale from 20 to 24 September 2017, Myntra’s Sale from 20 to 24 September 2017, and Shopclues’ Maha Bharat Diwali Sale from 20 to 28 September 2017 are all in violation of the guidelines issued by the DIPP.

In its complaint, the traders body divulges that the advertisements being carried out by these ecommerce companies for the last couple of weeks is an attempt of soliciting retail customers to their ecommerce platforms by influencing prices and creating an uneven level playing field in the industry.

Under the country’s FDI policy, ecommerce companies aren’t legally allowed to carry out retail trading activities, but ecommerce portals like Amazon, Flipkart, Snapdeal etc. have become such habitual offenders of the government policies that they’re circumventing the law by engaging in B2C (business-to- commerce) activities which is prohibited for ecommerce marketplace portals.

FDI policy guidelines dictate that ecommerce portals which have opened their channels for FDI can only indulge in business activities for B2B (business-to-business) business, meaning they have to stay away from undertaking any B2C (business- to-consumer) business activities. However, majority of the ecommerce players of the country have failed to adhere to this rule.

According to allegation levied by CAIT Secretary General Praveen Khandelwal, by inserting big advertisements in the mass media, these companies are addressing the consumers directly, something which is in strong contravention of the FDI guidelines.

He said, “They (e-commerce firms named) do not have ownership of the inventory of the products purported to be sold on their technology platform, how can they offer discounts or discounted prices on the products for which they are not the owners-questioned trade leaders.”

The latest development in the case is, that CAIT has charged Indian ecommerce players like Amazon, Flipkart and Snapdeal etc for violation of FDI policy for e-commerce of the Government issued on 29 March, 2016 by Department of Industrial Promotion & Policy, Ministry of Commerce.

Keep watching this space to know what action the government decided to take on the matter.

This development was first reported in India Today.

[Image: YourStory]

Government’s Ecommerce FDI policy is Still Not Liberal and Here's Why

The Narendra Modi government since assuming office in May, 2014 has talked about focusing on reviving the Indian economy by launching various schemes like Digital India, Make in India and Startup India etc. But, the one thing that the government is currently struggling with is the formation of policies to fully support the execution of their these schemes.

Holding testimonial to this fact is the recent clarification issued by the government regarding permissible foreign direct investment (FDI) in ecommerce. Many industrial experts are also branding this move by the government as a win of protectionism over liberalisation. According to them, these reforms though on the face look like an effort to boost the bewildering economy and put power in the hands of the consumer but they're instead a significant of capture by a strong lobby, especially, offline retail.

The Indian government needs to realise that their very own pet projects like Startup India etc. will also have to bear the brunt of these unnecessary policy restrictions that they're imposing and their spineless surrender to lobby groups. The one solution that the government can actually take is to open the gateway to all organised retail, whether offline or online, to 100 per cent Foreign Direct Investment (FDI).

The marketplace model is for sure one of the best ways to do ecommerce that man has been able to invent till now. It serves the producers and the consumers well. What's fascinating is the fact, that even the age old brick-and-mortar organised retail in the country also subscribes to the marketplace model in order to save its money on holding inventory.

Currently, the government has asked the following three restrictions to be adhered on the marketplace platform:

1) They're not allowed to offer discounts.
2) A particular vendor’s share of trade volume on the marketplace cannot exceed above 25 percent.
3) The seller will be wholly responsible for the post-sales delivery and customer satisfaction.

The first restriction placed by the government is an all-open attack on essential pricing freedom. Predatory pricing is a matter of concern for the competition commission and not of the investment policy. This way the entire organised retail sector would be deemed responsible for predatory pricing by the unorganised retail sector, just the same way online retail is held responsible for the same crime by the brick-and-mortar sector. Instead of going around banning the whole online discounts model, they should let all the retailers have exposure to investors who are ready to spend some money.

Further, the second and third restriction can be overcome by taking measures like creating separate organisations for the marketplace providers to carry out prohibited transactions. This ends up only adding to the transaction cost and does not benefit the Indian economy in any way whatsoever.

Government’s Ecommerce FDI policy is Still Not Liberal and Here's Why

The Narendra Modi government since assuming office in May, 2014 has talked about focusing on reviving the Indian economy by launching various schemes like Digital India, Make in India and Startup India etc. But, the one thing that the government is currently struggling with is the formation of policies to fully support the execution of their these schemes.

Holding testimonial to this fact is the recent clarification issued by the government regarding permissible foreign direct investment (FDI) in ecommerce. Many industrial experts are also branding this move by the government as a win of protectionism over liberalisation. According to them, these reforms though on the face look like an effort to boost the bewildering economy and put power in the hands of the consumer but they're instead a significant of capture by a strong lobby, especially, offline retail.

The Indian government needs to realise that their very own pet projects like Startup India etc. will also have to bear the brunt of these unnecessary policy restrictions that they're imposing and their spineless surrender to lobby groups. The one solution that the government can actually take is to open the gateway to all organised retail, whether offline or online, to 100 per cent Foreign Direct Investment (FDI).

The marketplace model is for sure one of the best ways to do ecommerce that man has been able to invent till now. It serves the producers and the consumers well. What's fascinating is the fact, that even the age old brick-and-mortar organised retail in the country also subscribes to the marketplace model in order to save its money on holding inventory.

Currently, the government has asked the following three restrictions to be adhered on the marketplace platform:

1) They're not allowed to offer discounts.
2) A particular vendor’s share of trade volume on the marketplace cannot exceed above 25 percent.
3) The seller will be wholly responsible for the post-sales delivery and customer satisfaction.

The first restriction placed by the government is an all-open attack on essential pricing freedom. Predatory pricing is a matter of concern for the competition commission and not of the investment policy. This way the entire organised retail sector would be deemed responsible for predatory pricing by the unorganised retail sector, just the same way online retail is held responsible for the same crime by the brick-and-mortar sector. Instead of going around banning the whole online discounts model, they should let all the retailers have exposure to investors who are ready to spend some money.

Further, the second and third restriction can be overcome by taking measures like creating separate organisations for the marketplace providers to carry out prohibited transactions. This ends up only adding to the transaction cost and does not benefit the Indian economy in any way whatsoever.

Govt Considering 100% FDI In E-Commerce Marketplace

There is a good news in store for e-commerce companies in India as they could get full foreign direct investment (FDI) if a proposal of Department of Industrial Policy and Promotion (DIPP) passes. Currently, the proposal is awaiting approval from the Finance Ministry and the Union Cabinet and just one step away for home-grown e-commerce firms like Flipkart and Snapdeal which have marketplace model.

As of now, the FDI norms do not allow a direct inflow of foreign funds in online or offline multi-brand retail or the online marketplace venture, thereby skirting the FDI hurdle

PTI reported on Tuesday that the government was considering permitting 100 percent FDI in the marketplace format of e-commerce to attract more foreign investments. This follows a recent meeting of top officials in DIPP, and the department of economic affairs and corporate affairs.

If the proposal gets green signal then e-commerce startups having marketplace format such as - Flipkart, Snapdeal, Paytm, Jabong, and Myntra, have been able to raise billions of dollars in FDI.

Till now, 100 per cent FDI is permitted in single-brand as well as in cash-and-carry or wholesale business. While no FDI is allowed in e-commerce activities, the online marketplace has been out of the purview of any rules.

The FDI proposal would also help the government sort out the ongoing legal matters and investigations into a number of e-commerce ventures after the Delhi High Court in November last year had asked the central government to probe 21 e-commerce entities for alleged violation of FDI rules. These 21 websites were listed in a petition by an industry body - All India Footwear Manufacturers and Retailers Association - that wanted the government to probe the violations of foreign investment laws.

[Top Image - Iksula]

Govt Considering 100% FDI In E-Commerce Marketplace

There is a good news in store for e-commerce companies in India as they could get full foreign direct investment (FDI) if a proposal of Department of Industrial Policy and Promotion (DIPP) passes. Currently, the proposal is awaiting approval from the Finance Ministry and the Union Cabinet and just one step away for home-grown e-commerce firms like Flipkart and Snapdeal which have marketplace model.

As of now, the FDI norms do not allow a direct inflow of foreign funds in online or offline multi-brand retail or the online marketplace venture, thereby skirting the FDI hurdle

PTI reported on Tuesday that the government was considering permitting 100 percent FDI in the marketplace format of e-commerce to attract more foreign investments. This follows a recent meeting of top officials in DIPP, and the department of economic affairs and corporate affairs.

If the proposal gets green signal then e-commerce startups having marketplace format such as - Flipkart, Snapdeal, Paytm, Jabong, and Myntra, have been able to raise billions of dollars in FDI.

Till now, 100 per cent FDI is permitted in single-brand as well as in cash-and-carry or wholesale business. While no FDI is allowed in e-commerce activities, the online marketplace has been out of the purview of any rules.

The FDI proposal would also help the government sort out the ongoing legal matters and investigations into a number of e-commerce ventures after the Delhi High Court in November last year had asked the central government to probe 21 e-commerce entities for alleged violation of FDI rules. These 21 websites were listed in a petition by an industry body - All India Footwear Manufacturers and Retailers Association - that wanted the government to probe the violations of foreign investment laws.

[Top Image - Iksula]

Flipkart, Snapdeal Oppose 100% FDI in India’s E-Commerce Sector

The debate around FDI (foreign direct investment) refuses to settle down and this time it has entered the e-commerce domain.

According to rumours doing the round, both the e-commerce portals and the brick & mortar retailers have been having contrasting views on the idea of FDI in the e-commerce space.Not only this, in order to garner the maximum profits, the two entities are also debating on the fact that who can be tagged as a marketplace.

Amazon, Snapdeal and Flipkart function as a marketplace in India as these e-commerce platforms allow any retailer to sell goods on their platforms. On the other hand, companies such as Reliance Retail, Shoppers stop are considered as closed marketplaces since they only choose to work with a selected few vendors.

Among the huge number of e-commerce portals, only Amazon India seems to be openly endorsing the cause of FDI in Online retail.

Recently, Retailers Association of India (RAI), a lobby organization for big companies such as Future Group and Reliance Retail has asked has asked the government clarification regarding what constitutes a marketplace.

They are also seeking a status equal to their online rivals, as many of the offline retailers have shown interest in opening their own online stores.

Many of these online retailers are in favor of 100 percent FDI in the e-commerce sector but this is being opposed by some of the big names of the online marketplace such as Snapdeal and Flipkart.

On the other hand traditional retailers seem to have agreed on a united stance on the issue. "A lot of our members are either already running or want to open online channels and get access to foreign capital. This ambiguity on 'retail marketplaces' creates a sense of risk," said Kumar Rajagopalan, chief executive, RAI, in a statement to the Business Insider.

According to e-commerce firms, they will end up losing a major share of market if such policies are initiated.

The government is hearing all the stances on the issue before preparing its final policy.

Indian govt. to allow FDI in e-commerce next month

Recently elected Prime Minister Narendra Modi's government could allow foreign direct investment (FDI) in India's e-commerce sector as early as next month, which will help big players like FlipKart, Amazon and Snapdeal to expand their business.

Currently in India global online retailers are restricted from selling goods directly to customers but allows them to own 100 percent of a marketplace business, where third-party suppliers can use their platform. Both Amazon and eBay use such a platform to operate in the country.

If the sources are to be believed an announcement on FDI in e-commerce is expected in next month's budget.

Foreign players like Amazon and eBay have been lobbying the government since last one year for easing restriction of FDI in potentially big Indian e-commerce market, which is expected to make up about 4% of gross domestic product by 2020.

Earlier in 2013 the Prime Minister's Office (PMO) was said to be keen to allow FDI in multi-brand e-commerce to bring it at par with foreign investment norms in offline retail. In 2012, Indian government opened up the retail sector to foreign players by allowing up to 51 per cent FDI in multi-brand retail, it had specifically excluded e-commerce firms.

Opening up of the FDI in e-commerce sector will benefit existing companies who need more capital to expand their business in a rapidly growing market, which is estimated to have expanded to around $16 billion from $3.8 billion in 2009.

All in all the decision of removing the restriction of FDI in E-Commerce in India will definitely provide benefits for key players in industries as well new entrants to allow foreign VCs and private equity firms to invest in their companies.