The NK Singh-led steering committee on foreign direct investment set up last August has recommended removal of FDI caps in several key sectors and a substantial increase in a few others.
The 120-page report which was submitted by Singh and Planning Commission deputy chairman KC Pant to the Prime Minister today has outlined a 10-point agenda including enactment of a foreign investment promotion law and overhaul of the existing strategy for attracting FDI.
The report has suggested increasing the sectoral cap on civil aviation from 40 per cent to 49 per cent and allowing equity participation by foreign airlines, on basic and mobile telecom services from 49 per cent to 74 per cent, on broadcasting direct-to-home services from 20 per cent to 49 per cent, on insurance from 26 per cent to 49 per cent and plantations from nil to 49 per cent.
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It has also recommended removing the existing cap and allowing 100 per cent FDI in private banks and investing companies, real estate including complexes and individual houses and buildings, advertising, trading, radio paging, airports, total bandwidth companies, oil and gas pipelines, gateways, coal washery and mining and quarrying of diamond and precious stones.
The recommendations of the committee will go to the group of ministers on foreign investment. The GoM will consider early processing and recommendations of the report, said Prime Minister Atal Bihari Vajpayee.
On retail, however, the committee has opposed introduction of FDI in view of the large employment potential of the sector, said Singh while speaking to the media after submitting the report. On the recommendation of opening the oil marketing sector to FDI, Pant refused to comment on the implications for disinvestment of HPCL and BPCL.
The committee has also hinted at further opening up of FDI in media by recommending that FDI equity limits in individual companies in the field of current affairs and news programmes could be replaced by limits to the aggregate market share (25 per cent to 49 per cent) that can accrue to foreign controlled news companies taken together.
It has also suggested relaxation of FDI norms for the defence industry by saying that there is absolutely no need to put equity restrictions on the production of civilian goods used by the defence forces. Further, it has noted that FDI with high level of foreign equity and management control is preferable over continued imports in defence equipment prodution.
The committee has recommended enactment of a foreign investment promotion law to be administered by the department of industrial policy and promotion as against the present administration of the Foreign Exchange Management Act by the directorate of enforcement. A legal group may be constituted to draft a new law for promotion of FDI and its national treatment, it said.