Reforms blitz continues

Cabinet set to clear 74% foreign investment in telecom, open skies policy

After a mini-Budget, the government is set to clear a barrage of reform measures, including a hike in the foreign investment limit in telecom companies to 74 per cent and allowing foreign airlines more access in India.

According to government sources, a Cabinet meeting is scheduled for Thursday to approve the measures pending for long.

They said the civil aviation policy "" drawing inputs from the Naresh Chandra committee report that has called for allowing foreign airlines to hold up to 49 per cent stake in domestic ones "" is likely to be taken up in the next Cabinet meeting in the following week.

The sources said foreign direct investment in the telecom sector would be capped at 49 per cent. But the overall ceiling, including the portfolio holdings, would be raised to 74 per cent.

While telecom companies would have to be headed by Indians, the management too would need to remain in Indian hands, they said.

This will require an amendment of the Articles of Association of companies like Bharti Tele-Ventures and Hutchison Essar, which are expected to benefit from the increase in foreign investment limit.

The increase in the FDI limit in aviation, along with the permission to allow domestic carriers fly international routes, will give a further fillip to the sector.

Last week's mini-Budget had extended several sops, including abolition of the Foreign Travel Tax and the Inland Air Travel Tax and the halving of excise duty on aviation turbine fuel to 8 per cent.

Another proposal that has already been cleared by the finance ministry relates to the increase in the FDI cap in private banks to 74 per cent.

While it is not certain if this will be taken up by the Cabinet in its next meeting, sources said it was

Finance Minister Jaswant Singh's Budget promise and had to be cleared by the government before he presents the vote-on-account.

The Cabinet might also approve dedicated television and radio channels for farmers and clear a 700 Mw power plant for the railways at Nabi Nagar in Bihar, the sources said.

The unfinished agenda

AVIATION

• Permit domestic carriers to fly abroad
• Give foreign airlines more access in India
• Increase FDI in domestic airlines to 49%

TELECOM

• Hike the foreign investment limit in telecom to 74%

BANKING

• Raise FDI in private banking to 74%