Composite cap on FDI to remove confusion among investors: Sitharaman

Introduction of the composite cap concept in the FDI policy will remove confusion among investors with regard to multiple limits on various categories of overseas investments such as FII, Commerce and Industry Minister Nirmala Sitharaman today said.

She said it was a very important in terms of giving more clarity to investors.

"When you have different categories of caps (like for FDI and FII), it leads to a situation where the person who is investing is confused or has to do much more due diligence to see that he doesn't exceed the limit and the person receiving the investment is also constantly looking it (in terms of) am I exceeding the limits... So it leads to a lot of layered due diligence to be maintained.

"So we thought that it is important to treat all foreign investment with the same kind of parity," she said here at a function.

Promising a simpler foreign investment regime, the government yesterday introduced a concept of composite cap for all kinds of overseas inflows including through FDI, FII and NRI routes -- a move that may benefit retail companies and stock exchanges among others.

Sitharaman said the government is taking several steps to attract investments. It has relaxed norms and increased FDI cap in sectors such as defence, railways and medical devices.

In 2014-15, investment by foreign institutional investors (FIIs) grew over seven times to USD 40.92 billion. FDI grew 27 per cent to USD 30.93 billion in the previous fiscal.

She further said that now there is no disconnect between various ministries on such issues.

"Without inter-ministerial groups which were abundant in the previous regime, there is now greater coordination among all of us and PMO has been an effective catalyst in bringing ministries together," she said.

She also said that states are now also keen to come and discuss matters with the Centre.

However, she added: "Challenge, of course, is to convince every section whether it is media, whether it is opposition, whether it is political activists or environment conscious people...To take them along, for which we are spending a lot of time. Even if we have to spend more time and it is necessary to do that. We will keep doing that," she added.