The Finance Ministry has constituted a committee to review Foreign Direct Investment (FDI) caps in various industry sectors, which will be headed by Economic Affairs Secretary Arvind Mayaram. CNBC-TV18's Aakansha Sethi reports.
The committee will comprise of the Department of Industrial Policy & Promotion (DIPP) Secretary as well as the Reserve Bank of India (RBI) Deputy Governor and a Securities and Exchange Board of India (SEBI) member.
The Finance Minister (FM) had laid down a broad principle in the Budget saying that investment below 10 percent will be treated as foreign institutional investor (FII) and investment greater than 10 percent will be treated as FDI.
This new committee apart from developing a transition mechanism to this regime as well as developing safeguards will also review sectoral FDI caps especially where it is 26 percent.
Sources in the finance ministry said that FDI cap in sectors like defense and FM radio may be increased to 49 percent from 26 percent currently. Two years back the then FM Pranab Mukherjee had held two meetings on the issue with the then Home Minister P Chidambaram, as well as Anand Sharma and all three were in favour of hiking the FDI cap. However, defence Minister AK Antony was strongly against this. So, it remains to be seen if he will be brought in board if the FDI cap has to be taken up.
A comprehensive revamp of the FDI regime is being discussed now due to mounting concerns over record-high current account deficit. However, in case of sectors like telecom and banking where FDI is already high at 74 percent there is unlikely to be a change.
Sources further said that a guideline could be introduced for companies having 100 percent FDI, to go in for a mandatory listing.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
