Review of literature on FDI in India on retail sector Essay Example

to the previous year.

According to the ministry, the majority of the outbound investment, around 90 percent, was allocated to five industries namely: commercial services, mining, wholesale and retail, manufacturing, and construction.

China saw a significant growth in outward investment in the real estate sector, with a rise of 95% amounting to $1.7 billion. The construction industry also experienced an astounding surge of 426% in investment outflows. It is probable that restrictions on foreign direct investment below the 50% threshold in the real estate sector will continue.

The government may reject the urban development ministry's proposal to eliminate all limitations on foreign direct investment below 50% in real estate. This is because they believe that certain regulations, such as minimum area norms, cannot be exempted.

The Department of Industrial Policy and Promotion, which is under the Ministry of Commerce and Industry, has suggested permitting foreign investment in real estate to support the sector impacted by a decline. Additionally, the ministry proposed substituting the existing requirement for built-up area with a minimum carpet area. In July, the urban development ministry declared that foreign investors concentrating on short-term construction assets may be exempted from specific conditions for a maximum of 49% foreign investment.

The recommendations, which are likely to be considered by the Cabinet, will enable real estate players to raise foreign capital at competitive rates and reduce dependency on the already strained domestic financial system. The proposals suggest reducing the minimum land area required for developing housing plots to 5 hectares from 10 hectares, as well as lowering the requirement for apartment complexes to a minimum total carpet area

of 20,000 sq metres from 50,000 sq metres of built-up area."

The FII/FDI limit in the sector is currently set at 49 percent. Currently, FIIs own 23 percent in the exchange while foreign corporate bodies own 10.5 percent, making the total foreign ownership in the country's only listed commodities exchange 33.5 percent.

MCX acting-chairman RM Premkumar stated to reporters during the company's 11th annual general meeting that after the approval of fungibility of increasing foreign investment, they will seek RBI approval. They are optimistic that the regulator will approve their application to raise stake.

Premkumar stated that FII expanding their stake in the company presents excellent opportunities.

The goal of the exchange is to allow a sub-limit of 23% to be exchanged for 26% foreign direct investment (FDI) in order to comply with secondary market regulations under the portfolio investment scheme.

The government has made it easier for foreign investors to participate in commodity exchanges by removing the need for government approval as long as they own less than 49% of the exchange. Despite strong police presence, the MCX AGM was uneventful due to the absence of protestors.

Premkumar expressed that MCX's recent decrease in share price would not lead to the company buying back its shares.

The decline in the share price is a result of a payment crisis in the group company, the National Spot Exchange (NSEL). Despite being a zero-debt company with strong fundamentals and an 87% market share, the share price has been affected by a decrease in volume caused by the implementation of CTT in July and the negative public perception of

any connections to NSEL.

Premkumar, the acting chairman nominated by the regulator FMC, made it clear that there are no connections, whether financial or otherwise, with NSEL, a completely separate company. He assured that there is no crisis as the exchange security systems are regularly audited, including collateral and fixed deposits.