In a move that would speed up foreign direct investments (FDI) into the country, the government is likely to do away with the practice of the Cabinet Committee on Economic Affairs (CCEA) clearing all foreign investment proposals of over Rs 600 crore, except in the case of certain sensitive sectors.
Under the current policy, any proposal which is not under the automatic route has to be cleared by the Foreign Investment Promotion Board (FIPB), after which it is sent for clearance of the finance minister or the CCEA, depending on the size of the investment.
According to officials, only sensitive sectors like aviation, telecommunications, retail and real estate would have to be cleared by the CCEA, in case the investment is over Rs 600 crore. For other sectors, the clearance of FIPB will be final.
Sources say this has been done as a part of the moves to hasten the time taken by the government to clear key investment projects. Typically, any foreign investment project sent to the CCEA take anywhere between 45 to 60 days before being taken up for clearances, as there are other policy issues that also come up before the Cabinet committee.
Meanwhile, commerce and industry minister Kamal Nath on Monday said the FDI policy review would be taken up by the Centre later this week. The matter is listed for approval of the Cabinet, which will meet this Thursday. However, he added, that it is unlikely that investments in retail sector would be made part of the revision. Currently, the government permits 100% FDI in wholesale cash-and-carry business and 51% FDI in single-brand retail. However, multi-brand retailers can take the franchise route to set up shop.
Nath had earlier said the FDI policy review was meant to streamline investment procedures in a comprehensive way. This would result in giving preference to sectors that generate more employment and economic activity.
In the policy review, the government is expected to permit 49% FDI in credit information companies as well as in public sector oil refineries and a composite ceiling of 49% on foreign investment (FDI and FII) in commodity exchanges. Besides, the government proposes to allow up to 74% FDI in chartered airlines, non-scheduled airlines and cargo airlines.
Also, it is expected to do away with the condition of compulsory divestment of up to 26% equity within five years for foreign companies trading and marketing petroleum products. The policy review also may include liberalising foreign investments in aircraft maintenance and real estate.