The Confederation of Indian Industry (CII) has welcomed the Union Cabinet's decision to liberalise sectoral FDI limits and put more sectors on the automatic route.
For a large emerging economy that seeks a strategic global role, it is essential to be perceived as an open and attractive investment destination by foreign players, it said in a statement.
The statement further said that given the current slowdown in FDI inflows and economy, opening up sectoral ceilings on FDI and automatic approval mechanism would attract more overseas investors. This, it said, would have cascading benefits on macroeconomic indicators like Current Account Deficit and Balance of Payments.
Besides, FDI has catalytic positive impact on productivity, employment, technology enhancement and competitiveness of the entire domestic industry, the statement said.
Allowing greater foreign participation in sectors like telecom, defence (post scrutiny by CCS), insurance and asset-reconstruction, etc. and enabling more sectors under the automatic approval route such as power exchanges and stock exchanges, would help improve overall health of the economy.
This, the CII said, should be bolstered by simplification of procedures viz. in retail so that limits don't remain under-utilised.
The CII congratulated the government for taking a comprehensive view of FDI in a range of sectors at the correct time.
However, it said, that on decisions pertaining to insurance and defence, CII would look to get greater clarity on the announcements made on Tuesday.
