Foreign direct investment (FDI) has been allowed through the automatic route in almost 92 per cent of all areas open to investments and would eventually be pushed up to 97-98 per cent, Department of Industrial Policy and Promotion (DIPP) Secretary Amitabh Kant said on Tuesday.
Speaking at the 93rd annual event of industry body Assocham, Kant said businessmen need not visit the Finance Ministry or Udyog Bhavan (Commerce and Industry Ministry) every time they need approvals for starting business.
In a related development, the government notified changes to key components of the FDI policy, opening up 15 critical sectors to higher investment caps and easier compliance norms by foreign investors. The changes were announced on November 10. The notification defined terms like manufacture. This was in line with the new policy to allow Indian manufacturers sell their products in any manner, wholesale and retail, including through e-commerce platforms.
The definition made sure simple value-addition to a product does not qualify for manufacturing. It defined manufacturing as a process to change an object into an entirely different one. It extended the new definition of control and ownership to limited liability partnership companies. Control was defined as the right to appoint a majority of company directors or control policy decisions, while a company would be considered owned by resident Indian citizens if more than 50 per cent of the capital was beneficially owned by them. Kant said the next major push towards improving ease of doing business was coming from the states, who have seen a significant rise in "competitive spirit". "If around 12 states grow at a rate of 10 per cent plus, only then would India grow at 9-10 per cent per annum," Kant said.
In the current year, he said, 340 specific points have been given to the states by DIPP to work on and improve their ease of doing business rankings. This is up from the 100-odd points given last year.
Stressing on the urgent need to urbanise, Kant said newer cities providing quality lifestyle and resources was imperative to handle the millions of Indians migrating from rural areas.
The secretary also said such a development model would have to be drastically different than those in the US or Europe, which have seen major urbanisation at a time when land, water and energy were not at a premium, as was the case now.