Modi eases rules to lure foreign investors as India growth slows

[NEW DELHI] Indian Prime Minister Narendra Modi eased restrictions on foreign direct investment across several sectors, including allowing overseas airlines to invest in state carrier Air India Ltd, in a bid to revive growth in Asia's third largest economy.

Foreign carriers can buy up to 49 per cent in the loss-making national airline, the government said in a statement. In a move aimed at further improving ease of doing business, the Cabinet also allowed single-brand retailers to start local operations without federal approval and foreigners can own up to 100 per cent in real estate brokerages.

Mr Modi is trying to lure foreign capital to revive economic growth that is seen expanding at the slowest pace since he came to power in 2014. The sale of Air India will be one of the key reforms in recent years as the airline is struggling with a debt load of US$7.6 billion and is surviving on a taxpayer bailout.

After taking power with the biggest mandate in three decades, the Bharatiya Janata Party has wrestled with opposition parties that have blocked a bill to make it easier to acquire land for factories. The government has been facing severe criticism over a chaotic roll out of a national sales tax that resulted in supply disruptions and demand slowdown.

Foreign direct investment into India rose 17 per cent in the April-September period to US$21 billion from a year ago, according to data provided by the commerce ministry. Since coming to power, Mr Modi relaxed rules on investment in defense, construction, insurance, pension and other sectors resulting in highest ever foreign investment inflows in the year ended March 2017.

BLOOMBERG