FDI cap hike in key sectors likely to boost investment mood

In an attempt to revive the investor sentiment, the government is considering raising the foreign direct investment (FDI) caps in key sectors of defence, telecom, business to commerce (B2C) segment of e-commerce and media. CNBC-TV18 Rituparna Bhuyan reports.

The defence sector might see some good news on the FDI front. Currently, the FDI cap in this sector is at 26 percent. Also read: Sharma for FDI cap hike in telecom, defence According to sources, defence minister AK Antony in 2010 had proposed a case-by-case approval of FDI proposals to increase it above 26 percent, which was vetted by the Cabinet Committee on Security (CCS). Sources say, it could be the compromise formula when the prime minister meets finance minister and commerce minister, as well as the defence minister shortly. The telecom sector is likely to see a 100 percent FDI in tower companies as well as operators. This proposal maybe discussed by the telecom commission in its next meeting. Currently, FDI is not allowed in the B2C segment. However, the Department of Industrial Policy and Promotion (DIPP) was rethinking on the ban in this sector. The Indian Council for Research on International Economic Relations (ICRIER) has been asked to study on the kind of conditions to be implemented to allow FDI in this segment. The government is also considering several proposals to fully open up media sectors like non-news channels, direct-to-home (DTH) services and FM radio.