Hard pressed for dollars, the Government on Tuesday liberalised FDI limits in 12 sectors, including allowing 100 per cent FDI in telecom and higher limits in ‘state-of-the-art’ defence manufacturing.
“Consensus on raising FDI limits in some sectors and relaxing the route in others was arrived at a meeting Prime Minister Manmohan Singh held with his key Ministers,” said Commerce and Industry Minister Anand Sharma on Tuesday night.
“While the FDI cap in defence sector remained unchanged at 26 per cent, higher limits of foreign investments in ‘state-of-the-art’ technology manufacturing will be considered by the Cabinet Committee on Security,” added Sharma.
The decision is along the lines of the assertion by Antony, who recently wrote to Sharma opposing any move to raise FDI cap to 49 per cent. Overruling the Commerce Ministry’s proposal, Antony had said, “The deliberated view of the Defence Ministry remains that the FDI cap in the defence manufacturing sector should remain at 26 per cent.”
In basic and cellular services, FDI was raised to 100 per cent from current 74 per cent. Out of this, up to 49 per cent will be allowed under automatic route and the remaining through FIPB approval.
In the contentious insurance sector, it was decided to raise the FDI cap from 26 per cent to 49 per cent under automatic route under which foreign companies do not require prior Government approval.