Govt may overhaul FDI regime in March

The government will go in for major changes in Foreign Direct Investment (FDI) regime next month and is likely to allow foreign investors to pick stake in commodity exchanges and change regulations and caps for aviation, petroleum and retailing.

"A comprehensive proposal on fine-tuning the existing FDI regime across diverse sectors will be taken to the cabinet for approval in March," sources said.

The note for consideration of Cabinet will follow a review of the FDI regime in the light of the experiences of the last one year, they said.

The Cabinet note is likely to have a proposal on FDI in commodity exchanges as Agriculture Ministry is likely to make up its mind on it by then.

It would also liberalise FDI in Asset Reconstruction Companies, where the present limit stands at 49% through Foreign Investment Promotion Board approval. In banking sector, the cap on voting rights is also being reviewed.

In petroleum, the dilution of condition that 26% of the equity must be divested in favour of Indian entities in five years could be a part of the Cabinet note.

In aviation, the proposal is to set a separate head of Air Traffic Services. The government will define what constitutes these services and should they have different FDI rules and limits.