Moody’s positive and Apple hopeful as India relaxes FDI restrictions

27/06/2016
Apple CEO Tim Cook In Mumbai May 2016

Apple CEO Tim Cook In Mumbai May 2016

India relaxes FDI restrictions: India’s decision to ease foreign direct investment restrictions in several sectors got the thumbs up from Moody’s Investors Service today. “The announcement is credit positive because it demonstrates a continuation of reform momentum and paves the way for private investment and a boost in productivity,” it said, but warned that it expected “political divisions” to make the process “uneven and slow moving.” 
India’s new policy changes lowers the FDI thresholds in the retail, defence and civil-aviation sectors in a move that Prime Minister Narendra Modi tweeted “would provide a major impetus to job creation and infrastructure” and make India the most open economy in the world for foreign investment.
The decision could also eventually pave the way for Apple to open its own stores in one of its main growth markets; in January, the multinational US-based technology company had sought government permission to open its own stores in India, but remains currently obliged to sells its products through a network of Indian-owned distribution companies and retailers.
As part of the changes the government said foreign-owned single-brand retailers would have a three-year grace period from complying with local-sourcing requirements that demand they buy at least 30% of their manufacturing materials from Indian vendors. After that, the rules for retailers offering “state-of-the-art” or “cutting-edge” technology would be relaxed for another five years.
India reported a 29% jump in foreign direct investment inflows to $40.46bn in the fiscal year ended in March, compared with $30.93bn in 2014-15, according to data from the trade ministry.
India is set to overtake the U.S. as the world’s second-biggest smartphone market after China.

Source: wsj