New Delhi: The central government may approve 100 percent FDI on contract basis in the manufacturing sector to boost foreign investment in the country. As per the foreign investment policy at present, 100 percent FDI is allowed through automatic route in the manufacturing sector. The manufacturer is also allowed to sell manufactured products in India through wholesale and retail channels including e-commerce without government approval. "The current policy does not say anything about the contract manufacturing and things are not clear about it," she said.
Large technology companies around the world are preferring manufacturing on a contract basis. That is why clarifications are required in this matter and the Government is looking into it positively. The Ministry of Commerce and Industry is working on a proposal which will be finalized shortly and sent to the Union Cabinet for approval.
Union Finance Minister Nirmala Sitharaman, in her Budget speech in July with the intention of attracting foreign investment, had proposed relaxation of FDI norms in sectors such as aviation, AVGC (animation, visual effects, gaming, and comix), insurance and single retail brands. FDI in India declined by one percent to 44.36 billion dollars in 2018-19. The government is looking into all options to deal with the ongoing slowdown in the country.
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