In order to give a push to the slow moving economy, government has introduced a major reform. It has decided to liberalise and hike foreign direct investment (FDI) limits in insurance, retail, telecom, defence and a host of other sectors. The decision was taken during a meeting of senior cabinet ministers chaired by Prime Minister Manmohan Singh.
The major changes are:
1. In the insurance sector, it was decided to raise the sectoral FDI cap from 26 per cent to 49 per cent under automatic route under which companies investing do not require prior government approval.
2. 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).
3. The Foreign Direct Investment (FDI) cap for civil aviation was, however, left unchanged at 49 per cent.
4. FDI cap in defence sector remained unchanged at 26 per cent but higher limits of foreign investments in 'state-of-the-art' technology manufacturing will be considered by the Cabinet Committee on Security.
5. 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.
6. In basic and cellular services, FDI was raised to 100 per cent from current 74 per cent. Of this, up to 49 per cent will be allowed under automatic route and the remaining through FIPB approval.
7. FDI of up to 100 per cent was allowed in courier services under automatic route.
8. In credit information firms 74 per cent FDI under automatic route would be allowed.
The decisions taken by the high level committee were based on recommendations of Mayaram Committee which had suggested relaxing investment caps in about 20 sectors.
The major changes are:
1. In the insurance sector, it was decided to raise the sectoral FDI cap from 26 per cent to 49 per cent under automatic route under which companies investing do not require prior government approval.
2. 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).
3. The Foreign Direct Investment (FDI) cap for civil aviation was, however, left unchanged at 49 per cent.
4. FDI cap in defence sector remained unchanged at 26 per cent but higher limits of foreign investments in 'state-of-the-art' technology manufacturing will be considered by the Cabinet Committee on Security.
5. 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.
6. In basic and cellular services, FDI was raised to 100 per cent from current 74 per cent. Of this, up to 49 per cent will be allowed under automatic route and the remaining through FIPB approval.
7. FDI of up to 100 per cent was allowed in courier services under automatic route.
8. In credit information firms 74 per cent FDI under automatic route would be allowed.
The decisions taken by the high level committee were based on recommendations of Mayaram Committee which had suggested relaxing investment caps in about 20 sectors.
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