The cabinet approved the extension of FDI in single brand retail from 49% to cent percent in automated route. "100 per cent FDI in single-brand retail through the automatic route will facilitate easy entry of MNCs in the retail trade and also violate the poll promise of the BJP".
The CPI-M also strongly opposed the decision to allow foreign airlines to invest up to 49 per cent in Air India.
So far, foreign airlines were allowed to invest in Indian companies operating scheduled and non-scheduled air transport services up to the limit of 49 per cent.
Under the new rules, for the first five years of their operations, SBRT entities would be allowed to set off their "incremental sourcing of goods" from India for global operations against the mandatory 30% local sourcing requirement.
Now, foreign airlines have been allowed to have up to 49 per cent stake under the approval route in Air India subject to certain conditions, an official release said.
It also said that Core investing companies and an Indian company engaged in investment activities would be allowed to receive FDI under automatic route provided their activities are regulated by financial sector regulator like RBI or SEBI.
At present, the Air India Maharaja has a debt burden of more than Rs 52,000 crore. For additional investment, they were required to obtain government approval. It is expected to report a net loss of Rs 3,579 crore for 2017-18. "This is done perhaps for the Prime Minister to make a statement at Davos", Sharma said.
"It has now been chose to permit 100 per cent FDI under automatic route".
Reacting to the development, Retailers Association of India CEO Kumar Rajagopalan said: "In the long run, today's reform would help boost employment, bring in wide product choices for consumers and help grow not just the economy, but the nation as a whole". "So, in a way it is not a differential treatment, rather the preference that was there (has been removed)", Raju said about the FDI norms relaxation. "Congress is giving nation to foreigners. most parties opposed FDI but due to sword of CBI, some didn't vote & Cong won through back door!", Narendra Modi had tweeted on 5 December 2012.
"Global brands across different categories, from apparel to electronics to accessories will be aided through this, providing further options to Indian consumers and improving IndiaÂ's ranking in ease of doing business", he added.
The government also said that issue of shares against non-cash considerations like pre-incorporation expenses and import of machinery will now be permitted under the automatic route in case sectors do not require government nod.
For foreign investments from so-called countries of concern that currently include Pakistan and Bangladesh, FDI applications for sectors under the automatic route will now be vetted by the industry department rather than the home ministry. After the amendments, no government approval is required for 100 per cent investment.