After sleeping on its job for four years, the Manmohan ministry, desparate to show something as it stares at a sure rout in the forthcoming polls, has liberalised the FDI regime in a dozen sectors, including allowing 100 percent in telecom and higher limits in defence manufacturing, to boost the sagging economy and to shore up foreign exchange.
The foreign direct investment (FDI) cap for civil aviation and retail, however, is left unchanged at 49 percent. While the FDI cap in defence sector remains unchanged at 26 per cent, higher limits of foreign investments in 'state-of-the-art' technology manufacturing will be considered by the Cabinet Committee on Security, Commerce and industry minister Anand Sharma told reporters in the Capital late last evening.
In the contentious insurance sector, it was decided to raise the sectoral FDI cap from 26 per cent to 49 percent under automatic route under which companies investing do not require prior government approval. A Bill to raise FDI cap in the sector is pending in the Rajya Sabha. "Consensus" on raising FDI limits in some sectors and relaxing the route in others was arrived at a meeting prime minister Manmohan Singh took with his key ministers, Sharma said. It was decided to allow 49 per cent FDI in single brand retail under the automatic route and beyond through the Foreign Investment Promotion Board (FIPB). Besides civil aviation, Sharma said, no view was taken on relaxing FDI caps in airports, media, brownfield pharma and multi-brand retail.
In case of PSU oil refineries, commodity bourses, power exchanges, stock exchanges and clearing corporations, FDI will be allowed up to 49 per cent under automatic route as against current routing of the investment through FIPB. The decisions taken today were based on recommendations of Mayaram committee which had suggested relaxing investment caps in about 20 sectors, but the meeting today approved only in 12. In basic and cellular services, FDI was raised to 100 percent from current 74 percent. Of this, up to 49 percent will be allowed under automatic route and the remaining through FIPB approval.
A similar dispensation would be allowed for asset reconstruction companies and tea plantations. Cent percent FDI is allowed in courier services under automatic route. Earlier, similar amount of investment was allowed through FIPB route. In credit information firms 74 percent FDI under automatic route would be allowed.
