In line with the indications given by Finance Minister P Chidambaram last week that Government is looking to raising foreign investment in all the sectors where there are caps on it in order to promote India as an investment destination, a panel formed by the Finance Ministry has proposed raising FDI in sectors like defence, multi-brand retail and telecommunications.
Virtually doing away with the 26 per cent ceiling, the committee headed by Economic Affairs Secretary Arvind Mayaram has recommended that FDI limit be raised to 49 per cent in almost all sectors through automatic route.
The move is clearly aimed at putting investments on fast track and to address Current Account Deficit (CAD) woes.
In order to make multi-brand retail more attractive to foreign investors, the panel suggested that the FDI limit be raised to 74 per cent under the Foreign Investment Promotion Board (FIPB) route from 51 per cent.
In case of single-brand retail, it suggested easing of the norms by advocating 49 per cent investment under the automatic route. Currently, the Government allows 100 per cent FDI under the approval route.
Similarly in case of pharmaceuticals sector, the committee recommended 49 per cent under automatic route as against 100 per cent under the government approval route.
As regards the telecom sector, the Mayaram panel said that 100 per cent FDI be allowed under the FIPB route as against 74 per cent. It wanted the government to retain 49 per cent FDI under automatic route in the telecom sector.
The proposal, Department of Industrial Policy and Promotion (DIPP) Secretary Saurabh Chandra said, would be circulated among the ministries for their comments.
The proposed policy is likely to be discussed among top ministries during the first week of July.