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FDI rules relaxed, debt-ridden Air India opened for foreign investment

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8 years ago

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Modi govt relaxes FDI rules, will allow foreign airlines to invest in Air India

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Narendra Modi Cabinet approves slew of changes in FDI rules, 100 per cent FDI through automatic route in single brand retail allowed

Over three years after it took a strong position against the then Dr Manmohan Singh-led UPA government’s decision for allowing foreign direct investment in various sectors, including single and multi-brand retail, the BJP under Prime Minister Narendra Modi appears to be going all out to promote foreign investment in various sectors of India’s stagnating economy.

On Tuesday, a meeting of the Union Cabinet chaired by the Prime Minister decided to substantially relax rules for FDI in a host of sectors, including single brand retail trading (SBRT), construction and civil aviation. The Cabinet has approved amendments to the Centre’s FDI policy in the civil aviation sector, paving the way for a liquidity infusion in the cash-strapped national carrier – Air India – which was hitherto excluded from the list of India’s airline operators in which FDI was allowed.

“As per the extant policy, foreign airlines are allowed to invest under Government approval route in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49 per cent of their paid-up capital. However, this provision was presently not applicable to Air India, thereby implying that foreign airlines could not invest in Air India. It has now been decided to do away with this restriction and allow foreign airlines to invest up to 49 per cent under approval route in Air India,” an official statement from the government said after the Cabinet meeting.

The Cabinet has decided that FDI in the debt-ridden Air India will be permitted on the condition that it does not exceed 49 per cent either directly or indirectly and that “substantial ownership and effective control of Air India shall continue to be vested in Indian National.”

The Centre has sought to justify its move claiming that the relaxation of FDI norms would help provide ease of doing business and lead to larger foreign investment inflows.

The Prime Minister and his cabinet seem to have realised that FDI is a major driver of economic growth and a source of non-debt finance for the economic development of the country. It is pertinent to recall that while the BJP was in Opposition and Modi was chief minister of Gujarat, he along with Arun Jaitley and Sushma Swaraj – then Leaders of Opposition in the Rajya Sabha and Lok Sabha respectively – had led the saffron party’s charge against the UPA government’s FDI policy.

Now, at a time when the country’s GDP seems to be on a steady decline amid projections of continuing stagnation in the domestic economy owing to disruptions caused by the Goods and Services Tax (GST) rollout, the Modi government is going all out to embrace a tool on boosting investment inflows that it had once vociferously decried for being against the interests of India.

Besides opening up Air India for FDI, the other key decision taken at Tuesday’s Cabinet meet was the red-carpet rollout for foreign investment in single brand retail trading.

“Extant FDI policy on SBRT allows 49 per cent FDI under automatic route, and FDI beyond 49 per cent and up to 100 per cent through Government approval route. It has now been decided to permit 100 per cent FDI under automatic route for SBRT,” the official statement said.

“It has been decided to permit single brand retail trading entity to set off its incremental sourcing of goods from India for global operations during initial 5 years, beginning 1st April of the year of the opening of first store against the mandatory sourcing requirement of 30 per cent of purchases from India. For this purpose, incremental sourcing will mean the increase in terms of value of such global sourcing from India for that single brand in a particular financial year over the preceding financial year, by the non-resident entities undertaking single brand retail trading entity, either directly or through their group companies. After completion of this 5 year period, the SBRT entity shall be required to meet the 30 per cent sourcing norms directly towards its India’s operation, on an annual basis,” the government said.

On FDI in the construction sector, the government said: “It has been decided to clarify that real-estate broking service does not amount to real estate business and is therefore, eligible for 100 per cent FDI under automatic route.”

The cabinet also decided to allow FIIs/FPIs to invest in power exchanges through primary market as well. So far 49 per cent FDI was permitted under automatic route in power exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010 but FII/FPI purchases were restricted to secondary market only.

The Centre has also decided to relax the rules followed for approval of FDI proposals that are moved in the automatic route sectors.

As per the existing procedures, FDI applications involving investments from Countries of Concern, requiring security clearance as per the extant FEMA 20, FDI Policy and security guidelines are to be processed by the Union home ministry for investments falling under automatic route sectors. Cases pertaining to government approval route sectors requiring security clearance are processed by the respective administrative ministries.

“It has now been decided that for investments in automatic route sectors, requiring approval only on the matter of investment being from country of concern, FDI applications would be processed by Department of Industrial Policy & Promotion (DIPP) for Government approval,” the Cabinet press note said.

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Rahul Gandhi, Rajnath Singh clash in Lok Sabha over ex-Army chief’s unpublished book on Ladakh

Lok Sabha proceedings were disrupted after Rahul Gandhi cited an unpublished book by former Army chief General MM Naravane on the Ladakh stand-off, drawing objections from Rajnath Singh and other BJP leaders.

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3 hours ago

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February 2, 2026

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Rahul Gandhi

A sharp confrontation unfolded in the Lok Sabha on Monday after Leader of Opposition Rahul Gandhi referred to an unpublished book by former Army chief General MM Naravane while speaking on the 2020 India-China Ladakh stand-off, prompting strong objections from treasury benches.

Rahul Gandhi began his address by holding a printout of a magazine article that carried an essay on General Naravane’s yet-to-be-published memoir, Four Stars of Destiny. The reference immediately drew an intervention from Defence Minister Rajnath Singh, who objected to the citation, saying quoting an unpublished book violated parliamentary rules.

Objections from treasury benches

Rajnath Singh demanded that the Leader of Opposition place the book before the House, arguing that since the memoir had not been formally published, its contents could not be cited during proceedings. The objection was echoed by Home Minister Amit Shah, who questioned how references could be made to material that was not publicly available.

Parliamentary Affairs Minister Kiren Rijiju went a step further, suggesting that the House should deliberate on action against members who do not comply with the Speaker’s rulings.

As Rahul Gandhi persisted, repeatedly referring to “Chinese tanks” while discussing the eastern Ladakh situation, the opposition from BJP members intensified, leading to sustained disruptions.

Opposition support and continued disruptions

Samajwadi Party chief Akhilesh Yadav backed Rahul Gandhi, stating that issues concerning China were sensitive and that the Leader of Opposition should be allowed to present his views in the House.

Responding to the objections, Rahul Gandhi questioned the resistance to his remarks, asking what in the book was causing such concern. He maintained that both the article and the contents he was quoting were “100 per cent authentic.”

The Congress leader also said he had not intended to raise the issue but felt compelled to do so after BJP MP Tejasvi Surya questioned the patriotism of the Congress and its leadership.

Government, Congress trade charges

Government sources accused Rahul Gandhi of setting a dangerous precedent by citing material from an unpublished book, alleging that such references could be misused to make unverified claims on the floor of Parliament.

Congress MP Priyanka Gandhi defended her brother, saying he was not attempting to defame the Army and was merely reading an excerpt attributed to the former Army chief. She accused the ruling party of resisting discussion whenever uncomfortable issues surfaced.

House adjourned amid chaos

The repeated interruptions forced Lok Sabha Speaker Om Birla to adjourn the House till 3 pm. When proceedings resumed, similar scenes played out as Rahul Gandhi again attempted to speak on the subject, leading to further disruptions and another adjournment.

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P Chidambaram avoids commenting on Trump’s dead economy remark echoed by Rahul Gandhi

Chidambaram stays silent on Trump’s ‘dead economy’ remark echoed by Rahul Gandhi as Congress critiques Union Budget 2026.

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11 hours ago

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February 2, 2026

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P Chidambaram

Finance Minister Nirmala Sitharaman on Sunday presented her ninth consecutive union budget, stopping just short of Morarji Desai’s record of ten.

Congress MP P Chidambaram, however, avoided commenting on the ‘India is a dead economy’ statement made by former US President Donald Trump last July, which was later echoed by Rahul Gandhi.

Speaking to reporters after reviewing the budget, Chidambaram said he could not respond as he lacked the full context of Trump’s original remarks.

The comment by Trump followed India’s continued purchase of Russian crude oil, which the US had criticized as indirectly funding military action in Ukraine. Trump imposed a 25 per cent penalty tariff on Indian imports and added: “I don’t care what India does with Russia. They can take their dead economies down together, for all I care.”

Rahul Gandhi later supported the statement, saying, “He is right, everybody knows this except the Prime Minister and Finance Minister. I am glad President Trump stated a fact…”

The remark sparked a political debate, with BJP leaders criticizing Gandhi, while some Congress members, including Rajya Sabha MP Rajiv Shukla, called the statement “completely wrong.”

Ahead of the budget, Gandhi had highlighted the impact of US tariffs on small textile businesses, noting on X: “50 per cent US tariffs are badly hurting textile exporters. Job losses, shutdowns… are reality of our ‘dead economy’.”

The debate gained traction following the budget announcement, which did not offer immediate relief to middle-class taxpayers and saw markets react sharply, with the Sensex closing 1,500 points lower on Sunday.

Chidambaram, as usual, led Congress’ critique of the budget, pointing to a decrease in capital expenditure as a percentage of GDP from 3.2 per cent in FY25 to 3.1 per cent, despite the proposal of Rs 12.2 lakh crore for capex. He added, “Revenue receipts short by Rs 78,086 crore… total expenditure short by Rs 1,00,503 crore… revenue expenditure short by Rs 75,168 crore… capex was cut by Rs 1,44,376 crore… not a word was said to explain this…”

Rahul Gandhi echoed the criticism, highlighting issues such as unemployment, farmers’ distress, declining household savings, and low investment. “A budget that refuses course correction and is blind to India’s real crises,” he said on X.

Responding to the criticism, Finance Minister Sitharaman said, “With due respects, I don’t know what course correction he is referring to. The economy and its fundamentals are strong.”

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Earthquake of 4.6 magnitude hits Andaman and Nicobar Islands

A 4.6 magnitude earthquake struck the Nicobar Islands at 10 km depth, highlighting the region’s seismic activity and potential risks from shallow tremors.

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11 hours ago

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February 2, 2026

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earthquake-tremors

An earthquake measuring 4.6 on the Richter scale struck the Andaman and Nicobar Islands early Monday at around 3:30 am, the National Center of Seismology (NCS) reported.

According to the NCS, the tremor occurred at a shallow depth of 10 km. The earthquake’s epicenter was located at a latitude of 9.03° North and a longitude of 92.78° East, placing it in the Nicobar Islands region.

In a post on X, the NCS confirmed the details: “EQ of M: 4.6, On: 02/02/2026 03:31:12 IST, Lat: 9.03 N, Long: 92.78 E, Depth: 10 Km, Location: Nicobar Islands.”

The Andaman and Nicobar Islands fall under Seismic Zone V, according to India’s seismic zoning map (1893-1984), making them one of the most earthquake-prone regions in the world. Historically, the islands have experienced several major earthquakes, including the devastating tremor on December 26, 2004, which caused significant land displacement and triggered tsunami waves, resulting in heavy loss of life and property.

Experts note that shallow earthquakes, like the one recorded on Monday, can be more hazardous than deeper ones. Seismic waves from shallow quakes travel a shorter distance to the surface, causing stronger ground shaking and posing higher risks to structures and human safety.

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