Govt proposes composite caps to streamline FDI regime

Seeking to the simplify the FDI regime, the government today proposed to do away with the distinction between different types of foreign investments.

Henceforth, portfolio and foreign direct investments will be treated as one category and will have to comply with FDI norms.

"To further simplify the procedures for Indian companies to attract foreign investments, I propose to do away with the distinction between different types of foreign investments, especially between foreign portfolio investments and foreign direct investments, and replace them with composite caps," Finance Minister Arun Jaitley said in his Budget speech.

He said the sectors which are already on a 100% automatic route would not be affected.

Currently, there are sectors where FDI and FII cap is clearly mentioned but on few others it was not.

The move would help in attracting foreign investments into the country.

During April-January period of the fiscal, FDI grew by 27% to USD 21.04 billion.

Earlier, there were confusions over the matter. "The move seeks to do away with the different kinds of overseas investment and bring about clarity in the norms," an official said.

It would also help in removing ambiguity on application of sectoral caps, conditionalities and approval requirements in different sectors.