Cabinet Decisions Current Affairs

Cabinet approves amendments to FDI Policy

The Union Cabinet has approved number of amendments to Foreign Direct Investment (FDI) Policy. The purpose of amendments is to simplify and liberalise FDI policy in India to provide ease of doing business in country. The liberalized policy will lead to larger FDI inflows contributing to growth of investment, employment and income.

Key amendments approved

  • 100% FDI for Single Brand Retail Trading (SBRT) under automatic route.
  • 100% FDI under automatic route in Construction Development.
  • Foreign airlines allowed investing up to 49% in Air India under government approval route.
  • FIIs/FPIs allowed investing in Power Exchanges through primary market.
  • Definition of ‘medical devices’ amended in FDI Policy.

FDI policy on SBRT

The existing policy FDI policy on SBRT allows 49% FDI under automatic route, and beyond 49% up to 100% is allowed through government approval route. The amendment now permits 100% FDI for SBRT under automatic route. It also permits SBRT entity to set off its incremental sourcing of goods from India for global operations during initial 5 years against mandatory sourcing requirement of 30% of purchases from India.

Incremental sourcing means increase in terms of value of such global sourcing from India for that single brand (in Indian Rupees term) particular financial year over preceding financial year. After completion of 5 year period, SBRT entity shall be required to meet 30% sourcing norms directly towards its India’s operation on annual basis.

Construction Development

The amendment clarifies that real-estate broking service does not come under real estate business. Therefore, it is eligible for 100% FDI under automatic route.

FDI in Civil Aviation

Foreign airlines are allowed to invest capital in Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49% of their paid-up capital under government approval route. However, this provision was not applicable to Air India, implying that foreign airlines could not invest in Air India. The amendment does away with this restriction and allows foreign airlines to invest up to 49% under approval route in Air India.

Power Exchanges

The present FDI policy allows 49% FDI in Power Exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010 under automatic route. However, Foreign Portfolio Investors (FPIs) and Foreign Institutional Investors (FIIs) purchases were restricted to secondary market only. The amendment now allows FIIs/FPIs to invest in Power Exchanges through primary market as well.

Medical devices

The approved FDI Policy changes definition of ‘medical devices’. Earlier FDI policy on pharmaceuticals sector provided definition of medical device as contained in FDI Policy will be subject to amendment in Drugs and Cosmetics Act. As Now the reference to Drugs and Cosmetics Act from FDI policy will be dropped.

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Cabinet approves fixed term for chairperson and members of National Trust

The Union Cabinet has decided to fix three-year term of chairperson and the members of the board of the National Trust, an autonomous body under the Ministry of Social Justice and Empowerment,

In this regard, it has approved proposal to amend National Trust for Welfare of Person with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act (NTA), 1999.

Key Facts

At present, Section 4 (1) of NTA, 1999 provides that chairperson or member of board of National Trust will continue in office beyond prescribed term of 3 years until his successor is appointed by government. In case of resignation of chairperson, section 5(1) of act provides for him to continue in office until his successor is appointed by government.

The wording of above provisions of NT Act in its present form has resulted in continuation of chairman for indefinite period as no suitable successor could be found eligible for appointment. The proposed amendments to National Trust Act will avoid such situation and thus eliminate any chance of prolonged continuation in the same post by any incumbent.

National Trust

It is a statutory body under Department of Empowerment of Persons with Disabilities (Divyangjan), Ministry of Social Justice & Empowerment. Its mandate is to discharge two basic duties – legal and welfare.

It fundamental purpose, is to create enabling environment, i.e. provide opportunities for Persons with Disabilities (PwD) through comprehensive support systems which will lead towards development of an inclusive society.

Objectives of National Trust

  • Enable and empower PWD to live as independently and fully as possible within and close to their community as possible.
  • Facilitate realisation of equal opportunities, protection of rights and full participation of persons with disability.
  • Extend support to its registered organisations to provide need based services.
  • Evolve procedures for appointments of guardians and trustees for persons with disabilities.

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