A panel led by Department of Economic Affairs (DEA) secretary Arvind Mayaram submitted its report on reviewing FDI sectoral caps to the Finance Minister on Tuesday. CNBC-TV18's Aakansha Sethi reports.
The DEA has recommended hiking of FDI cap in sectors where it is currently at 26 percent to 49 percent. Mayaram has also said that all the sectors can be put under automatic route, except those that are sensitive, wherein FDI is upto 49 percent.
Sectors such as defense, security agencies and I&B may still continue to be under the automatic route. Mayaram has also said, where the FDI cap is 74 percent, it can be taken up to 100 percent -- in sectors like telecom and banking.
However, in banking an amendment will be needed of the Banking Regulation Act.
This report has been submitted to the finance minister on Tuesday morning and he has sent it to Department of Industrial Policy and Promotion (DIPP).
So, now it is really for the DIPP to consider it. Then there will be a discussion at the later stage with the Prime Minister (PM). Sources in the government say that you may actually see the setting up of an EGoM.
The government doesn’t have a very large window to work on because once the monsoon session starts, which is a month away, it will be difficult to go ahead with the reforms.
The finance minister said that by June-end the government will float Cabinet notes on hiking FDI caps. Now, these will have to be separate Cabinet notes. So, there will have to be discussions with the respective ministries as well.
CNBC-TV18 Sources say the meeting of ministers is likely on July 1 or 2 to discuss the Mayaram report.
On insurance and pension, Mayaram has recommended 49 percent. FDI in insurance and pension again needs to go via Parliament. That legislation has been pending for a long time and will be via a separate route.
There is nothing that the government can do about it at this point in time. In FDI in retail, you have 51 percent already. So, FDI in retail is likely to stay at what it is currently.
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