India removes limits on foreign investment in retail

Under existing policy 100% FDI was possible for SBRT companies, but government approval was needed in order for foreign shareholders to own more than 49%. The amended policy removes that restraint and allows for full ownership under the automatic route. Foreign-owned retailers will also be exempt from a requirement that they source 30% of their purchases from India for the first five years of their operations.

Restrictions on foreign investment in energy exchanges have also been relaxed. Previously overseas investors could only purchase shares in exchanges through the secondary market, but the new rules allow foreign investment through the primary market as well. FDI through the automatic route is still restricted to 49%.

The new policy is the latest move in the government's ongoing push to attract foreign investment to India by making it easier for companies to do business in the country.Last year's Union Budget included several measures intended to provide investors in Indian companies, including private equity funds, with clarity on their tax burdens

In 2016, the government announced that 100% FDI would be allowed for online marketplaces. This was seen as a significant boost for the country's growing e-commerce sector, though it was also paired with significant restrictions on the ability of marketplaces to offer discounts.

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• Topics
• South Asia
• Regulation
• Consumer
• Buyouts
• India