FDI reforms in aviation and retail trading

In a major easing of FDI norms in the
aviation sector, the Indian government has today allowed foreign airlines to
hold up to 100% in Indian aviation companies under the automatic route, with
the exception of Air India.

Foreign investors have been allowed to
invest up to 49% in Air India through government approval route ahead of its
proposed privatization.

Existing rules allow foreign airlines
to own as much as 49% in an Indian airline, with the exception of Air India.

The Government has clarified that substantial
ownership and effective control of Air India shall continue to be vested in
Indian nationals, hence the limit on FDI in Air India.

The Government also approved 100% FDI
in single-brand retail through the automatic route. Some tweaking has been done
with the earlier 30% local sourcing norm as well, which should suit the
investors.

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About the author :

Bhumesh Verma is a lawyer with over 2 decades of experience in advising domestic and international clients on corporate transactions (M&A, Venture Capital, Private Equity, Startups, corporate advisory, etc.) and features in “The A-List – India’s Top 100 Lawyers” by India Business Law Journal. He keeps writing frequently on FDI, M&A and other corporate matters and is a guest faculty as well. He can be reached at bhumesh.verma@corpcommlegal.com.