Paying heed to the view that certain elements of the foreign direct investment (FDI) policy create uncertainty and virtually drive away investors, the department of industrial policy and promotion (DIPP) on Thursday floated a discussion paper inviting suggestions from the public.
In the paper titled ?FDI policy-Rationale and relevance of caps?, the department invited public comments on questions like whether equity caps are fulfilling any purpose other than ?control? and should those activities that can now be done indirectly, through downstream investments, be allowed to be done directly. The discussion paper also broadly talks of the policy’s origin and its need in the governance.
It says, ?is there any relevance left for equity caps, especially below 49%?, can the concerns supposed to be addressed by control through equity caps be addressed through sectoral conditions?, do the caps create an unfair opportunity for arbitrage?, if it all it is necessary to have caps in certain sectors, is it a better option to ask MNCs to list on Indian stock exchanges and then offload equity within a stipulated period?? It asks ? As long as sectoral caps exist, should it be specified that they are exclusive of FII??
This comes in wake of the industry pitching for the idea that ?Indian industry is mature enough that it doesn’t need to hold partners to ransom any more.?
Comments on the paper can be made till July 15. The paper comes as a part of the inclusive approach to the formulation of various policies by the DIPP. The department has, so far, published eight discussion papers, of which five have a direct nexus with FDI policy. Of these five, policy action has been completed in respect of three discussion papers and is ongoing in respect of two discussion papers. Saying that the FDI policy in India has been reviewed in four phases time and again and it was in the year 2010 when the government in a step towards continuation of the rationalisation process consolidated all existing regulations on FDI into a single document for ease of reference.