India, Needing Jobs, Eases Rules on Foreign Investment
NEW DELHI — The Indian government announced sweeping changes on Monday to throw open its economy to foreign investment, taking it a large step away from its socialist past.
The long-awaited rules were rolled out just two days after the surprise resignation of the widely respected chairman of the central bank,Raghuram G. Rajan. They allow foreign investors to establish 100 percent ownership in companies involved in defense, civil aviation and food products, albeit with government approval. Foreign investors will also be permitted to buy up to 74 percent of Indian pharmaceutical companies without seeking government approval.
The government also relaxed regulations that had made it difficult for companies like Apple and Ikea to establish retail operations in India.
The changes, instituted through executive order, signal a greater shift away from the socialist and protectionist policies of India’s modern post-independence history. They had long been sought by domestic and international business leaders.
The election of Prime Minister Narendra Modi in 2014 was widely expected to lead to more market-friendly policies, which he had championed in his years as the chief minister of the state of Gujarat. The delay in bringing them about had led to widespread criticism that Mr. Modi was not moving fast enough to stimulate the economy.
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