FinMin proposes sweeping changes in FDI regime

Seeking to promote India as an investment destination, the Finance Ministry today proposed sweeping changes in the FDI regime, favouring higher sectoral caps in almost all sectors including defence, multi-brand retail and telecom.
Virtually doing away with the 26 per cent ceiling, a committee headed by Economic Affairs Secretary Arvind Mayaram recommended that Foreign Direct Investment limit be raised to 49 per cent in almost all sectors through automatic route.
The suggestions, according to Mayaram, are aimed at getting more foreign investment. "We certainly need more FDI. We will get more FDI."
The Secretary, who has submitted the report to the Finance Minister, said that further action will now be taken by the Department of Industrial Policy and Promotion (DIPP).

The Committee suggested that FDI in defence be raised to 49 per cent under the government approval route, from 26 per cent at present.
Besides, it has proposed to increase FDI cap to 74 per cent in the multi-brand retail trading under the government approval route.

It also proposed raising the cap to 49 per cent under automatic route in sectors like single-brand retail, existing pharma companies, power and commodity exchanges, PSU banks, tea plantation, print media, PSU petroleum refinery, asset reconstruction companies, stock exchanges, insurance, depositories and clearing corporations and satellite services.
As regards courier services, the Mayaram panel said FDI up to 100 per cent be allowed under automatic route. In the civil aviation sector, the committee suggested 100 per cent FDI in non-scheduled air transport services under the automatic route as against 49 per cent.

The proposed policy, sources said, will be discussed among top ministries during the first week of July.