Announcing the decision, parliamentary affairs minister Pramod Mahajan saidthat the negative list, including industries requiring industrial licence,would be further pruned after a review exercise by a high-powered group ofministers.

Under the existing policy, licensing is mandatory in sectors like alcohol,cigarettes, equipment of electronics, aerospace and defence, industrialexplosives, hazardous chemicals, and pharamaceuticals.

Foreign investment in companies in the small sector will have to seekapproval from the Foreign Investment Promotion Board for investment beyond24 per cent in the equity of the company.

The cabinet approved the formation of a ministerial committee to studyinvestment ceilings in various sectors. The committee will comprise thefinance minister, external affairs minister, commerce minister,telecommunications minister, chemicals and fertiliser minister, and theminister of state for small scale industries.

Companies which already have a foreign collaborator and have more than oneventure and tie-up in the country will not be available to sail through theautomatic route. Also proposals in which the foreign investment involvesacquisition of shares in an existing Indian company in favour of a foreignor NRI or OCB investor will not be allowed the automatic route.

Items which will not be eligible for investment under the automatic routewill be those which require an industrial licence under the Industries(Development and Regulation) Act. At present, there are six areas whichrequire an industrial licence for manufacturing, namely, alcohol,cigarettes, electronics for defence and aerospace requirements, industrialexplosives, hazardous chemicals, and drugs and pharmaceuticals. Theautomatic route will be denied to all items which require an industriallicence in terms of the locational policy notified by the Government underthe New Industrial Policy of 1991.

In another decision, the cabinet cleared the construction of a new airportat Devanhalli near Bangalore by a joint-venture company to meet the boomingair traffic growth in the city.

Mahajan said the airport would be built by a joint-venture company. TheAirports Authority of India (AAI), Karnataka State Industrial Investment andDevelopment Corporation (KSIIDC), and a strategic partner will hold 26 percent of the equity. The Government is in the process of looking for astrategic partner, Mahajan said. The balance equity of 74 per cent will beavailable for investors, both domestic and foreign, Mahajan said.

Mahajan said the AAI and KSIIDC have signed a memorandum ofunderstanding(MOu) for the joint venture, and added that the decision toconstruct the international airport at Devanhalli was taken in view of thespurt in the passenger and cargo traffic at the existing facilities. Atpresent, Bangalore is handling 20 lakh passengers and 44,000 tonnes ofcargo, which is expected to go up to 37 l akh passengers and79,000 tonnes of cargo by 2005, he said.