Panel wants 49% FDI in retail, sets $15 billion target by '07-08

The Investment Commission today set a $15-billion FDI target by 2007-08 and suggested that the government allow 49 per cent FDI in retail, contract labour in all areas and automatic route for all investments within the sectoral cap.

The commission has also pitched for promoting special economic zones in areas like auto components, textiles, electronics and chemicals.

It has also mooted a level-playing field in sectors where public sector dominates and creating a special high-level fast track mechanism for priority sector projects.

The commission, headed by Tata Sons Chairman Ratan Tata, which submitted its report to Finance Minister P Chidambaram, also said achieving a sustained GDP growth of over 8 per cent would require over $1.5 trillion capital investment over the next five years, across public and private sectors.

By 2009-10, the annual domestic investment required would be $350 billion, while the FDI required would be $20 billion.

Chidambaram said India needed stable policies and strong economic fundamentals to attract foreign investment and was on the "right path".

The 99-page report, submitted by the commission, has recommended that the FDI in retail could be 49 per cent initially, and increased subsequently.

It has also said the 100 per cent FDI allowed in wholesale cash and carry should be allowed on the automatic route. It has said there should be no restriction on scale and operation.

The only sector which the commission has not favoured opening up of is legal service which it said should be subject to WTO negotiations in services.

The report has called for an increase in FDI to 100 per cent from 74 per cent in private banks and 49 per cent in public sector banks at present. The 49 per cent FDI in PSU banks will be inclusive of both FII and FDI.

Similarly, it has suggested that restrictions in branches should be replaced by market share or dominance criteria. It has also mooted raising the investment limit in insurance from 26 per cent to 49 per cent through the automatic route.

Even in the media sector, the commission has recommended that 100 per cent FDI be allowed in uplinking through the automatic route. This will include new channels which are currently restricted to 26 per cent. Even in the print media, it has suggested that 49 per cent investment be allowed, including both FII and FDI.

In the coal and lignite sector, the commission has said 100 per cent FDI should be allowed in the captive non-power sector but has favoured continuation of the 50 per cent FDI in coal mining through the automatic route.

It has also mooted identification of a few national thrust areas for sectors like tourism, power, textiles and agro-processing.