RBI to issue notification on FDI liberalisation shortly

The momentum on foreign direct investment (FDI) reforms is picking up. The press notes 2 and 3 of 2009 allow the foreign companies to invest in any sector. These have been forwarded by the finance ministry to the Reserve Bank of India (RBI) to make them a part of the Foreign Exchange Management Act (FEMA) framework, reports CNBC-TV18's Rituparna Bhuyan.

Sources say that the RBI is likely to notify press notes under FEMA shortly. This implies that the notes will get legal backing. The FDI-funded Indian-owned and controlled companies will be able to invest through the downstream investment route in any sector.  

Also read: India to lift FDI cap in few sectors by July third week: FM

It means that foreign companies will be able to indirectly invest in sectors like defence, newspapers, or even satellite channels where the current FDI regime is very strict.

It has also implications on the Mayaram panel report. It calls for 49 percent FDI in many sectors because the underlying principle, according to government sources, is that what is being allowed indirectly should also be allowed directly. It means that if FDI is being allowed indirectly through these notes, it should be also allowed directly through the FDI policy.

Meanwhile, the DIPP is meeting Indian and foreign retailers on FDI issues on Thursday. Around 15 Indian and foreign companies are likely to attend it. Jean Noel of Carrefour, Kishore Biyani of Pantaloon, Bijou Kurien of Reliance Retail, Sameer Barde of Tesco will be there. Participation from Wal-Mart, Auchan and other such foreign companies will also be seen.

The DIPP is open to receive suggestions, which might require change in the retail policy, sources say. This means that if there are significant workable suggestions, the department might work on it and take it to the cabinet.

But it depends on the kinds of demands. One has to wait and watch for the kind of suggestions that will be thrown by these retail companies in the meet.