Most sectors except certain strategically important sectors open for 100% FDI under the automatic route

Department for Promotion of Industry and Internal Trade’s (DPIIT) dynamic reform exercise Business Reforms Action Plan (BRAP) strives to promote Ease of Doing Business, boosts competitive federalism

Amalgamation facilitates consolidation among Public Sector Banks; helps achieve economies of scale and synergy benefits

To promote FDI in the country, the Government has put in place an investor-friendly policy, wherein most sectors except certain strategically important sectors are open for 100% FDI under the automatic route, Minister of State for Commerce and Industry, Shri Som Parkash said in reply to a parliament question today. 

It may be noted that the policy on FDI is reviewed on an ongoing basis, to ensure that India remains attractive and investor friendly destination. Changes are made in the policy after detailed consultations with stakeholders including apex industry chambers, associations, sectoral ministries/ departments and representatives of industries/groups and other organizations. Government has recently undertaken a number of reforms across sectors like Defence, Petroleum and Natural Gas, Insurance etc.

The Department for Promotion of Industry and Internal Trade (DPIIT) is the Nodal Department for coordinating the initiatives under Ease of Doing Business which are aimed at creating an investor-friendly ecosystems across the country. In addition to ongoing schemes of various Departments and Ministries, Government has also undertaken various steps to boost domestic and foreign investments in India. These include the introduction of Goods and Services Tax, reduction in Corporate taxes, financial market reforms, consolidation of public sector banks, Foreign Direct Investment (FDI) policy reforms, reduction in compliance burden, various policy measures to boost domestic manufacturing, to name a few.

DPIIT, in coordination with States and Union Territories (UTs), is spearheading various reforms to improve the business regulatory environment in the country. DPIIT undertakes a dynamic reform exercise called Business Reforms Action Plan (BRAP), wherein all States and UTs are assessed on the basis of implementation of designated reform parameters. The focus of the reforms has been on streamlining the existing regulations and processes and eliminating unnecessary requirements and procedures. The Action Plan for the year 2022 covers 352 reform points.

All the States and UTs, including Jharkhand, Delhi and West Bengal have also participated actively in this exercise over the years and reforms implemented by them are recorded on the BRAP Portal (https://eodb.dpiit.gov.in/).The exercise boosts competitive federalism among the States/UTs and thereby helps to further facilitate investor-friendly ecosystems across the country.

Comprehensive reforms have been undertaken by the Public Sector Banks (PSBs) under Enhanced Access and Service Excellence reforms agenda to improve the ease of doing business including, inter alia, the following –

1. Setting up of Loan Management Systems and Centralised Processing Centres, resulting in retail loan disbursement turnaround time reducing from 31 days to 10 days;
2. Enhancement of access to mobile and Internet banking by PSBs through increase in average number of services offered, customer-friendly features, and regional languages available on the customer interface;
3. Introduction of end-to-end automated digital lending in most of the larger PSBs for unsecured personal loans, loans to micro-enterprises and renewal of loans to MSMEs;
4. Enablement of digital retail loan request initiation through digital channels in all large PSBs; and
5. Thrust on customer-need-driven, analytics-based credit offers by large PSBs.

The objective of amalgamation of the banks was to facilitate consolidation among PSBs to create strong and competitive banks capable of achieving economies of scale and realization of synergy benefits with wider product and service offering to customers. As a result of this effort, customers of amalgamated banks received access to increased number of branches and ATMs from which they can now avail banking services.

Customers have also received access to a larger bouquet of products and services through harmonization of the same across banks being amalgamated together and enhanced their lending capacity for loans of a larger size. Further, the increased scale and customer base in the amalgamated banks has also enabled banks to opening/reorganizing controlling offices and processing centers, equipping them for better customer serving.

Full FDI automatic route policy expands investor access while DPIIT reforms and bank consolidation improve ease of doing business. The Government allows full foreign direct investment under the automatic route in most sectors, with ongoing policy review and stakeholder consultation to keep the regime investor friendly. DPIIT implements the Business Reforms Action Plan to streamline regulations and promote competitive federalism among States/UTs. Public Sector Bank reforms and amalgamations are pursued to consolidate banks, achieve economies of scale, harmonise products and services, expand branch and ATM access, accelerate loan processing, and enable wider digital lending and customer servicing.