The Prime Minister's Office has convened a meeting on June 21 to deliberate upon a roadmap for further easing FDI norms to attract more foreign investment. "Prime Minister Narendra Modi is likely to chair the meeting in which officials from ministries, including Commerce and Industry, Finance and Home Affairs, would participate," sources said.
The meeting assumes significance as the government is considering relaxing FDI norms in more sectors, including existing pharmaceutical companies. The Department of Economic Affairs has proposed that FDI up to 49 per cent should be allowed in existing pharmaceutical companies through the automatic route and anything beyond through approval of the Foreign Investment Promotion Board (FIPB).
FDI in the sector is a contentious issue as concerns have been raised over mergers and acquisitions of Indian pharma companies by foreign giants. The Department of Industrial Policy and Promotion (DIPP) has also proposed complete ban of FDI in tobacco sector. The proposal was supported by the Finance and Health Ministry but Niti Aayog has raised certain issues. According to sources, the other sectors which may see some kind of policy tweaking include single brand retail and food processing.
Last year, the government relaxed FDI norms in about dozen sectors at one go including defence, retail and construction development. Steps have also been taken to improve business climate of the country by promoting ease of doing business. FDI in the country has touched an all time high of USD 40 billion in 2015-16.
Foreign investment is considered crucial for India, which needs around USD 1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth. A strong inflow of foreign investments will help improve the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar.