Govt clears 49% FDI in Air India

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Govt clears 49% FDI in Air India

Definition of "medical devices" amended in the FDI Policy.

By allowing 49% FDI in Air India, the government will likely get more bidders and hence a better valuation.

Swadeshi Jagran Manch has also expressed its deep displeasure about government decision to allow 40% foreign investment in Air India.

Anshul Gupta, Research Director at Gartner India, said that the latest decision "removes systemic friction and will allow global brands to speed up investment to begin operations sooner".

He has said that the government is taking the plea of huge loss Air India is being burdened with to justify its move, but the Centre is seeking to hide the fact that the carrier has been pushed to this situation not because of its management's failure but owing to "imposition of disastrous decisions on the company by successive governments at the Centre".

The Union Cabinet chaired by the Prime Minister had given its approval to a number of amendments in the FDI Policy.

"This will lead to larger FDI inflows, contributing to growth of investment, income and employment", the government said in a statement.

This is the second time that the FDI policy has been changed by the current government. Accordingly, the Government has made a decision to introduce a number of amendments in the FDI Policy. However, foreign investors' purchases were restricted to the secondary market only.

Overseas investment policy has also been liberalised in case of power exchanges, an online platform where electricity is traded. As the real estate business has been crippled, allowing 100% FDI under the automatic route for real estate broking services can help matters. "This would go against the interests of the domestic manufacturing and also would discourage the future investment in manufacturing in India and therefore would go against the own declared policy of the government of encouraging "Make in India", said Ashwani Mahajan, national co-convener, SJM.

These include any instrument, apparatus, appliance, implant, material or other articles, whether used alone or in combination, plus any software tool, intended by its manufacturer to be used especially for human beings or animals for diagnosis, prevention, monitoring, treatment or alleviation of any disease or disorder. The amendment is likely to benefit companies such as Swedish furniture maker Ikea, which is planning to set up stores across the country.

According to a PTI report: The Confederation of All India Traders (CAIT) said the move will facilitate easy entry of MNCs (multi-national companies) in the retail trade. It remains an unfinished agenda for the government.

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