‘Procedural issues related to FDI will also be reviewed’.
The government is planning to further relax foreign direct investment (FDI) norms in many sectors, including defence, to attract foreign capital to stimulate investment and plug the growing current account deficit.
“We are examining various aspects of streamlining FDI inflows. The Union Cabinet will consider proposals to relax FDI norms and how it could be done for areas that will boost manufacturing. Defence is one of the probable areas. India can become a great manufacturer of defence equipment,” Commerce and Industry Minister Kamal Nath said on the sidelines of a meeting with a Belgian government delegation.
Nath said the procedural issues related to FDI would also be reviewed. “The review of the FDI policy will signal that India is on a growth path, is open to businesses and is continuing on a growth trajectory,” he added.
Sectors proposed to be opened up include multi-brand retail, where the investment limit is likely to be 51 per cent for categories like sports goods, consumer electronics and watches.
Moreover, investment limit in single-brand retail is likely to be relaxed from the current 51 per cent to 100 per cent, but with the caveat that the foreign investor will source 50 per cent of annual sales from India over a five-year period.
The Union Cabinet had recently given its nod to amend various insurance-related Acts to ensure that the FDI limit in the sector could be increased to 49 per cent from the current level of 26 per cent.
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Meanwhile, India remains an attractive destination for foreign investors, who pumped in FDI worth $ 2.5 billion (See table) in September, which is an increase of 259 per cent over $713 million in the same month last year.
“FDI flows are continuing and we hope the momentum is maintained in the coming months. The FDI target of $ 35 billion for 2008-09 will be met,” Nath said.