Government announces much awaited economic reforms Allows FDI in Multi-Brand Retail Aviation

In a recent development, the Cabinet has today approved Foreign Direct Investment (FDI) in the aviation sector by foreign carriers and has also opened India’s retail sector allowing 51 per cent FDI in multi-brand retail..In a recent development, the Cabinet has today approved Foreign Direct Investment (FDI) in the aviation sector by foreign carriers and has also opened India’s retail sector allowing 51 per cent FDI in multi-brand retail..The government has decided to allow foreign airlines to buy up to 49 per cent stake in local Indian carriers to provide much needed cash flow to the domestic airlines..According to Moneycontrol, the move will help troubled companies like Kingfisher, Spicejet and Go Air. Gulf-based carriers like Emirates could be the first foreign airlines to enter the Indian aviation sector..It is understood that the government has allowed FDI in multi-brand retail on the condition that individual States will be allowed to decide whether they want to opt for it..With this move, India will throw open its retail sector to foreign giants like Wal-Mart and Carrefour. The global retail giants have long been eyeing India’s lucrative retail sector which is mainly dominated by small ‘mom & pop’ shops. With this move, the experts expect retail sector to see lot of M&A activity with the entry of foreign players and the sector will get the much needed capital..Moneycontrol reports, there is an opt out clause in the FDI in multi-brand retail, which has been the most contagious of the issues. According to the clause, “Retail sales outlets maybe set up in those states which have agreed or agree in the future to allow FDI in multi-brand retail under this policy. This is an enabling clause. This means that no FDI in retail will be allowed in any state unless the state explicitly agrees to come on board and agree to the policy.”.It has been proposed that retail sales outlets may be set up in those States which have agreed to or will agree to allow FDI in multi-brand retail under this policy. The establishment of the retail sales outlets will be in compliance of applicable State laws/ regulations, such as the Shops and Establishments Act etc..FDI in multi-brand retail has come with some riders. The Cabinet has set the minimum FDI limit at $100 million, with a mandate that one half of any investment be made in infrastructure like cold-storage chains and warehouses. Another condition is that at least 30 per cent of the goods to be sold have to be sourced from local producers..In November 2011, the Cabinet had cleared the proposal to allow 51 percent foreign direct investment (FDI) in multi-brand retail. However, due to strong opposition from political parties, the cabinet had stalled the implementation of its decision