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Close to completing one year in office, the Union Cabinet on Thursday took some big ticket decisions to prop up the economy and send a message to the farming community.
It decided to overhaul FDI norms for non-resident Indians (NRIs) to treat these on a par with domestic funding, as well as invest ₹10,500 crore to boost urea production to reduce the country’s import dependence.
These decisions come at a time when concerns are being voiced over “slow reforms”. The Opposition, too, has stepped up its attack on the government for doing little for the farming community, which has been hit by the vagaries of the weather and low returns.
In a major decision, the Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi, relaxed foreign direct investment norms for NRIs, treating non-repatriable investments made by them on a par with domestic funding. NRI investments will now not be treated as FDI and will be exempted from sectoral restrictions, limits and approvals.
The move seeks to encourage greater foreign exchange remittances by the overseas community as well as attract investment in key sectors such as insurance, defence and railways.
The Cabinet also decided to broaden the definition of NRIs to include Overseas Citizens of India (OCIs) cardholders and Persons of Indian Origin (PIOs) cardholders. “The decision that NRI includes OCI cardholders as well as PIO cardholders is meant to align the FDI policy with the stated policy of the government to provide PIOs and OCIs parity with NRIs in respect of economic, financial and educational fields,” an official release said.
The measure is expected to result in increased investments across sectors and greater flow of foreign exchange remittances leading to economic growth. At present, civil aviation is the only sector that allows NRIs to invest up to 100 per cent in scheduled air transport service against an FDI cap of 74 per cent.
Fertiliser plants To boost urea production and reduce import dependence, the Cabinet decided to pump in ₹10,500 crore in two plants. It approved an investment of ₹6,000 crore for the revival of Fertiliser Corporation of India’s Sindri unit in Jharkhand, which has not been operating since 2002.
It also approved the setting up of a new ammonia-urea complex of 8.64 lakh tonnes (lt) capacity at Namrup in Assam through public-private partnership or by a joint venture involving Brahmaputra Valley Fertiliser Corporation Ltd, Oil India Ltd and the Assam government. The estimated investment is ₹4,500 crore.
Both moves are aimed at reducing urea imports, which are estimated at 80 lt, with domestic production pegged at 230 lt and demand at around 310 lt.
The setting up of a new unit will meet rising demand for urea in Bihar, West Bengal and Jharkhand. It will also ease the pressure on rail and road infrastructure, an official statement said.
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