India Now Most Open Economy In World For FDI, Says PM Modi

New Delhi: Prime Minister Narendra Modi said sweeping liberalisation of rules on foreign direct investment announced on Monday would make Asia's third-largest economy the most open in the world.

"Key reform decisions were taken at a high level meeting, which makes India the most open economy in the world for FDI," PM Modi said in a tweet.

In a second tweet, he said the changes would provide a "major impetus to employment and job creation in India."

India has announced radical reforms to FDI rules, opening up its defence and civil aviation sectors to complete outside ownership.

The reforms also loosen restrictions on inbound investments in pharmaceuticals and retail.

In other changes, India allowed 100 per cent foreign direct investment (FDI) in civil aviation, following on from last week's launch of a new policy that lowered barriers to entry for airlines that want to fly international routes.

The government also allowed foreign companies to own up to 74 per cent in 'brownfield' pharmaceuticals projects without prior government approval. India already allows 100 per cent ownership of greenfield pharma businesses.

The reforms announcement comes two days after India's central bank governor Raghuram Rajan, feted by foreign investors, announced he would not be available for reappointment when his term expires in September.

Mr Rajan's decision, whose reforms have been credited for much of the economy's success in recent years, came as a jolt to the country's financial markets. The rupee fell to a near one-month low and bonds weakened on Monday.

The last time Prime Minister Narendra Modi's two-year-old government announced a loosening of FDI norms was after his the BJP suffered a heavy defeat in Bihar last month.