Finance minister P Chidambaram had set up the committee earlier this year to clarify the definition of FDI and foreign institutional investors as well as reviewing sectoral limits for foreign investment. The report, which aims at boosting capital flows that could help in financing the sharply higher current account deficit, makes a strong pitch for increasing the foreign investment cap in multi-brand retail to 74 per cent from the existing limit of 51 per cent.
If a company has to meet the criteria for back-end infrastructure under the FDI in multi-brand retail norms, then a higher investment limit may help, said a person familiar with the development, pointing out that the government is yet to receive even one concrete proposal in the multi-brand retail segment.
We have submitted the report to the finance minister. Action will be taken on it as and when the government decides. The policy is with the Department of Industrial Policy and Promotion so finally they will take a call. This is just our recommendation, Mayaram said after submitting the report.
The high-powered committee has also called for permitting up to 49 per cent FDI in single brand retail under the automatic route as well as hiking foreign investment cap in telecom to 100 per cent from the existing limit of 74 per cent.
Additionally, the panel has proposed raising the foreign investment limit in sectors that are currently limited to 26 per cent to 49 per cent. This proposal would largely impact sectors such as defence production, public sector banks and FM broadcasting, where FDI is currently limited up to 26 per cent.
It has also suggested automatic approval to FDI proposals up to 49 per cent, thereby limiting the role of the Foreign Investment Promotion Board (FIPB) that currently approves FDI proposals. However an official said that the government may choose to retain project approvals for sensitive sectors with the FIPB.
Regarding the contentious pharmaceuticals sector, the Mayaram committee is understood to have called for automatic approval to FDI proposals up to 49 per cent, as against the current policy of 100 per cent through the government approval route. Indications are that the committees report, which is yet to be made public, had also called for hiking FDI limits in insurance and pension sector but said that it would require legislative action.
A senior government official said that the report would be circulated to all concerned ministries for their comments. Sharma had last Sunday announced his intent to hike FDI in defence production and telecom sectors.
FIPB clears proposals worth R1,647 crore
MUMBAI: The Foreign Investment Promotion Board (FIPB) on Tuesday approved 16 projects envisaging foreign investment worth Rs 1,647 crore, while deferring Punj Lloyds proposals for lack of security clearance.
Based on the recommendations of the Foreign Investment Promotion Board (FIPB) in its meeting held on May 10, 2013, the government has approved 16 proposals of foreign direct investment (FDI) amounting to Rs 1,646.875 crore, an official statement said.
Among the proposals cleared include that of ABG Container handling, Belgium-based Celio International and pharma firms Mylan Laboratories and Terumo Mauritius Holding.