Manufacturing Sector
  • FDI in Various Sectors
    05 Aug, 2014

    As per extant FDI policy, FDI, up to 26% is permitted, in the defence sector, with prior Government approval. Government has, further, interalia announced the following decisions.

    • Amendment of certain conditions relating to FDI, up to 100%, in single brand retail trading, vide Press Note No. 4(2012 Series) dated 20.9.2012
    • Permitting FDI, up to 51%, in multi-brand retail trading, subject to specified conditions, vide Press Note No. 5 (2012 Series) dated 20.9.2012
    • Permitting foreign airlines to invest, in the capital of Indian companies, operating scheduled and nonscheduled air transport services, up to the limit of 49% of their paid-up capital, vide Press Note No.6 (2012 Series) dated 20.9.2012
    • Permitting FDI, up to 49%, in power exchanges, vide Press Note No. 8 (2012 Series) dated 20.9.2012.

    The above mentioned decisions have been incorporated in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 vide Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Sixth Amendment) Regulations, 2012 notified in the Gazette of India: Extraordinary vide G.S.R.795(E) dated 19.10.2012.

    It is the Government’s assessment that implementation of the policy is likely to facilitate greater FDI inflows into front and back-end infrastructure; technologies and efficiencies to unlock the potential of the agricultural value chain; additional and quality employment; and global best practices. This, in turn, is expected to benefit consumers and farmers in the long run, in terms of quality and price. The 30% mandatory sourcing condition has been incorporated to encourage local value addition and manufacturing. The increased level of activity, in the front-end, as well as in the back-end, resulting from greater FDI inflows, is expected to create additional employment opportunities for rural and urban youth. It is, further, expected to encourage existing traders and retail outlets to upgrade and become more efficient, thereby providing better services to consumers and better remuneration to the producers from whom they source their products.

    The consultations with key stakeholders regarding FDI in multi-brand retail trading brought out views both for and against FDI in multi brand retail trading. On balance, however, the discussions generally indicated support for the policy, subject to the introduction of adequate safeguards. The necessary safeguards have, accordingly, been incorporated in the policy and are expected to protect the interests of various stakeholders. Government has also decided to constitute a high-level group to make recommendations on internal trade reforms, with a view to ensuring distributional efficiencies and also that the benefits from trade are available to all sections of society

    Two proposals have been received for FDI up to 100% in single brand retail trading (from M/s Ingka Holding Overseas B.V, Netherlands and M/s Fossil India Private Limited). Further, seven proposals have been received, for single brand product retail trading, with foreign equity participation up to 51% (from M/s Fapa Company Ltd., Samoa; M/s Promod S.A.S, France; M/s Tommy Hillfiger B.V, The Netherlands; M/s NA Pali Europe SARL; M/s The Semex Alliance, Canada; M/s Le Cruset SAS France and M/s Sketchers South Asia Private Limited). No proposal has been received for FDI in multi-brand retail trading.

    Highlights of Overall Performance of CPSEs in 2010-11

    Manucaturing SectorThe 51st Public Enterprises Survey in the series (2010-11), brought out by the Department of Public Enterprises, Ministry of Heavy Industries & Public Enterprises, Government of India on the performance of Central Public Sector Enterprises (CPSEs) was placed in Parliament recently. There were 248 CPSEs in 2010-11, out of which 220 were in operation. The remaining 28 CPSEs were under construction. The main Highlights of the performance of CPSEs, during 2010-11 is mentioned below:

    Investment in CPSEs

    Total paid up capital in 248 CPSEs as on 31.3.2011 stood at ?.1,55,433 crore compared to ?1,48,367 crore as on 31.3. 2010 (249 CPSEs), showing a growth of 4.76%. Total investment (equity plus long term loans) in all CPSEs stood at ?6,66,848crore as on 31.3.2011 compared to ?5,80,784 crore as on 31.3.2010, recording a growth of 14.82%. Capital Employed (net block plus working capital) in all CPSEs stood at ?9,50,449crore as on 31.3.2011 compared to ?9,09,285 crore as on 31.3.2010 showing a growth of 4.53%.

    Turnover, Profit/Loss and Net Worth of CPSEs

    Total turnover of all CPSEs during 2010-11 was ?14, 73,319crore compared to ?12, 44,805 crore in the previous year showing an increase of 18.36%. Profit of profit making CPSEs stood at ?1, 13,770crore during 2010-11 compared to ?1, 08,434 crore in 2009-10 showing a growth of 4.92%. Loss of loss incurring CPSEs stood at ?21,693 crore in 2010-11 compared to ?16,231 crore in 2009-10 showing an increase in loss by 33.57%.Reserves & Surplus of all CPSEs went up from ?6,05,637crore in 2009-10 to ?6,55,488 core in 2010-11, showing an increase by 8.23%.Net worth of all CPSEs went up from ?6,59,437crore in 2009-10 to ?7,23,128 crore in 2010-11 registering a growth of 9.66%

    Contribution of CPSEs to the Central Exchequer

    Contribution of CPSEs to Central Exchequer by way of excise duty, customs duty, corporate tax, interest on Central Government loans, dividend and other duties and taxes increased from ?1,39,918 crore in 2009-10 to ?1,56,124 crore in 2010-11, showing an increase of 11.58%.

    Foreign Exchange Earnings and Outgo by CPSEs

    Foreign exchange earnings through exports of goods and services increased from ?84,224 crore in 2009-10 to ?97,004crore in 2010-11, showing a growth of 15.17%. Foreign exchange outgo on imports and royalty, know-how, consultancy, interest and other expenditure increased from ?4,24,207crore in 2009-10 to ?5,22,577 crore in 2010-11 showing an increase of 23.19%.

    Market Capitalization of CPSEs on Mumbai Stock Exchange

    Total Market Capitalization (M_Cap) of 45 listed CPSEs, based on the stock price in Mumbai Stock Exchange, increased from ?14,26,212 crore as on 31.03.2010 to ?15,06,698 crore as on 31.03.2011. Market Capitalisation of CPSEs during this period, therefore, increased by 5.64% M_Cap of CPSEs as per cent of BSE M_Cap decreased from 23.13% as on 31.3.2010 to 22.03% as on 31.3.2011.