| No govt nod needed for 49% FPI in most sectors |
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New Delhi, 30 July The government on Thursday allowed up to 49 per cent foreign portfolio investment ( FPI) through the automatic route in most sectors, including brownfield pharmaceuticals, single- brand retail, insurance, pension and facsimile editions of foreign newspapers. This is part of the new foreign investment policy, which allows composite foreign investment caps in all sectors barring private banking and defence. Up to 49 per cent FPI could also come without government permission in commodity exchanges, credit information companies, stock exchanges, power exchanges, tea plantation, scientific journals, up- linking and down- linking of non- news current affairs TV channels, mining and mineral- separation of titanium. Earlier, these sectors had lower caps for the automatic route. For instance, in the insurance and pension sectors, FPI of up to 23 per cent was allowed through the automatic route, while in brownfield pharma, any investment would require the government's prior permission. This was also true of mining and mineral separation of titanium. In technical and scientific journals, facsimile editions of foreign newspapers and up- linking and down- linking of non- news current affairs TV channels, too, foreign investment required the government's approval. In single- brand retail, 100 per cent foreign direct investment( FDI) was allowed, butonly upto 49 percent could come through the automatic route. Now, up to 49 per cent FPI can come through the automatic route. In commodity, power and stock exchanges, 49 per cent foreign investment was allowed automatically, but only 23 per cent could come as FPI. In credit information companies, 74 per cent foreign investment was allowed through the automatic route, but only up to 24 per cent could come as FPI. Now, only a few sectors such as print media ( dealing with news and current affairs) would have a lower foreign investment cap ( 26 per cent), including for FPI. Meanwhile, the government allowed composite caps for the sectors, instead of the earlier practice of separate caps for FDI and FPI. The Cabinet had taken a decision in this regard earlier this month. "Now, there will be complete fungibility across all sectors and FII ( foreign institutional investment) up to 49 per cent will be allowed automatically. Under the new rules, companies with a 100 per cent FDI limit can increase the limit of FII up to that level, of which 49 per cent requires no prior approval," said a senior official of the Department of Industrial Policy and Promotion. Turn to Page 7 > THEN AND NOW What was the previous position? |Sectors had separate limits for foreign portfolio investment ( FPI) and foreign direct investment ( FDI) |FPI and FDI were treated separately What has changed now? |Complete fungibility across all forms of foreign investment |All foreign equity to be known as foreign investment, with one sectoral cap |Foreign portfolio investments will be subsumed under the larger sectoral cap |Sectors that followed government route, including those having 100% under government route, can now have FPI up to the level of 49 per cent under the automatic route. Beyond 49 per cent will require prior permission from the government SECTORS IMPACTED Earlier position automatic route, but only 23 per cent could come through FPI |CREDIT INFORMATION COMPANIES: 74% foreign investment under automatic route, but only 24% as FPI |BROWNFIELD PHARMACEUTICALS: 100% FDI via government route |SINGLE- BRAND PRODUCT RETAIL TRADING: 100% FDI, ( 49% automatic route) |INSURANCE AND PENSION: 49% ( FDI+ FPI), but only 26 per cent through automatic route |PUBLICATION OF FACSIMILE EDITIONS OF FOREIGN NEWSPAPERS, SCIENTIFIC AND TECHNICAL JOURNALS : 100% FDI via government route |TEA PLANTATION: 100% FDI via government route |MINING AND MINERAL SEPARATION OF TITANIUM: 100% FDI via government route Present position: |
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| Rajasthan brings e- tail under shops law |
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New Delhi, July 30 The Indian e- commerce sector, mostly funded by marquee foreign investors, has largely remained outside the domain of rulebooks so far. But that may change. The Rajasthan government, for instance, is about to bring the estimated $4 billion e- commerce industry under flexible labour laws. The e- commerce universe, with firms such as Amazon, Flipkart, Snapdeal, Paytm and now Alibaba set to join the list, is not defined as a sector under any labour laws at present. But, for the first time, it has found a place in the proposed amendments to the Rajasthan Shops and Commercial Establishments Act ( RSCE) 1958. No central labour law defines e- commerce as an establishment, according to people in the know. The proposal says " any premises where any trade or business or e- commerce is carried on, which is not covered under a shop or a commercial establishment" will come under the proposed RSCE Act. This will make it mandatory for e- commerce companies to follow rules for basic working conditions like working hours, wages for overtime work, weekly holidays, and annual leave with wages. "E- commerce is an extremely important sector in India and they need to have registration," said a senior Rajasthan labour department official. Internet companies, including e- commerce firms, have been in the news for large- scale hiring at various levels and they figure among coveted employers at top business school placements. E- commerce market leaders have set ambitious targets for increasing their workforce by many thousands this year. "Bringing e- commerce under labour laws is important for the safety and basic working conditions of the workers," said Manish Sabharwal, chairman of recruitment firm Teamlease. According to reports, more than 400 delivery men employed by various e- retail companies in Mumbai went on a strike protesting lack of basic working rights. The news report further said the workers demanded fixed duty hours, overtime allowance, proper uniform, and weekly holidays from their companies. While some of them were on company rolls, others were hired through third- party vendors on contract. State governments have their own rules related to shops and establishments. The law lays down statutory obligations and rights of employers and employees. At present, physical shops or workplaces employing workers are covered under the RSCE Act. This means ecommerce companies that have set up offices in various parts of the state are covered under the state- specific labour law. "However, their identification as an industry is not specified anywhere. Most e- commerce firms register themselves as retail network or services companies offering goods online and will not be covered under the law. The category of e- commerce was not identified while the labour laws were written, as a result companies could align themselves to a definition that suited their requirement," said Rituparna Chakraborty, president of the Indian Staffing Federation. Experts believe bringing ecommerce firms under state specific laws will give them more breathing space and bring clarity in the regulatory framework. "Any e- commerce company will either have to be covered under the Factories Act (a central legislation) or the Shops and Commercial Establishment Act of the state. While the former has been amended only three times since Independence, the latter has gone through changes more than a hundred times in the past and would be far better for e- commerce firms. It clarifies the regulatory framework for the companies and makes it more flexible, local and finite," said Sabharwal. E- commerce companies have been able to grow at a rapid pace without too many laws coming in their way. Foreign direct investment (FDI) in the sector is one example. Although FDI is not permitted in e- commerce, most companies have been able to route foreign money through a different structuring. Marketplaces hosting sellers on websites have emerged as a model of choice for e- commerce companies, where FDI rules do not apply. There have been protests against deep discounts offered by these companies as well, with brick- and- mortar retailers knocking on the doors of the Competition Commission of India. But neither the government nor the competition watchdog has found any ground for action against e- commerce companies. The industry has, however, come under the scrutiny of tax laws of some states, and the issue is yet to be resolved. WIDENING THE NET |E- commerce isn' t defined as an establishment in both central and state labour laws |However, e- tailers setting up shops or offices are covered under various labour laws |E- tailers register themselves as retail network or services company offering goods online |Experts say coming under the Shops and Commercial Establishment Act of states will give e- commerce firms more clarity and flexibility |
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