New govt may liberalise FDI norms for more sectors, says DPIIT Secy

Says industry should prepare itself for a low tariff regime in the long run

More sectors may see liberalisation in the foreign direct investment (FDI) norms once the new government is formed, Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Rajesh Kumar Singh said on Saturday.

Speaking at the Confederation of Indian Industries (CII) annual business summit here, Singh said India probably had one of the “most liberal, open-sky FDI policies in the world”.

“Recently, we delivered on liberalising our FDI norms in space, and it is quite possible that under a new government, we can attempt some further liberalisation of any pockets that are left,” he said.

He, however, did not name the sectors that could see liberalisation in the FDI norms.

In February this year, the Centre eased FDI norms in the space sector by allowing 100 per cent overseas investment in making components for satellites, as part of efforts to attract overseas players and private companies into the segment.

Singh said that while the government’s ambitious production-linked incentive (PLI) scheme was triggering investment flows into the country, there could be other ways to attract funding, without any budgetary outlay.

Take the case of the recently announced electric vehicle (EV) policy that entails lowering of import duty, subject to investment and local manufacturing commitment. Similarly, non-tariff policies such as quality control orders (QCO) are also being used carefully to boost investment and exports.

Without naming the US-based EV giant Tesla, Singh said while everyone talked about that “one company”, the government was expecting “responses from many companies” to the EV policy that was announced in March.

As India negotiates a bunch of FTAs, it is on its way to becoming a "little less conservative” as far as the agreements are concerned, he said, adding that the industry should prepare itself for a lower tariff regime in the long run. 

“While doing so, you have every right to expect that any distortionary in any inversion in those taxes in our tax regimes should be corrected,” Singh said.

“DPIIT is doing a cross-sectoral study to ensure that both in the GST Council and the finance ministry, we try to rationalise it and show that those inversions are removed as to improve the competitiveness of our manufacturing sector,” he said.

Singh also said that DPIIT was focused on the World Bank’s new Business Ready (B-Ready) ranking that will replace the Ease of Doing Business Index.

The survey starts in August this year and a new set of indices will cover both ease of entry, ease of operation and ease of exit of businesses.

“The World Bank has shared an odd set of 1,370 questions, which will be assessed across various economies,” he added.