United States Department of State

India United States Department of State

In the past year, the BJP-led government took a number of steps to ease FDI restrictions in sectors including insurance, defense, railways, construction, and medical devices. The government also issued two successive ordinances to revise the Land Acquisition Act. While the current government appears generally friendly to FDI, many sectors of the economy retain equity limits for foreign capital, and this has proven a deterrent to investment. The long-awaited Insurance Act, which raises caps on FDI from 26 percent to 49 percent for instance, also mandates that insurance companies retain "Indian management and control. As discussed below, many sectors also require multi-step processes for central and state government approval. While the previous and current governments have progressively opened the country up to greater FDI, the overall attitude remains mixed. Outside of pensions, insurance, and defense, the government is empowered to raise FDI limits up to 100 percent without Parliamentary approval, yet in sectors such as multi-brand retail (MBR), the government has taken an anti-FDI stance. While considered pro-business, much of the party's constituency is comprised of shop-owners and other small business owners whom could potentially suffer losses under a liberalized MBR regime.