The industry ministry has sought suggestions from other ministries on streamlining norms and further reduce procedural delays in clearing foreign direct investment (FDI) to temper the effects of the US sanctions.
In another positive signal, the Foreign Investment Promotion Board (FIPB) has questioned the civil aviation ministry's stand on the Tata airlines proposal with foreign equity of up to 40 per cent.
In an official noting during a board meeting on June 13, at which the Tata proposal was discussed and then deferred on the aviation ministry's request, the FIPB has stated, "The board felt that up till now in other sectors in which (foreign) equity cap has been provided, such as in telecom and banking, no further condition about management structure of the company/body corporate has been stipulated as a condition".
The aviation ministry has sought clarifications from the Tatas as to which foreign institutional investors would be picking up 40 per cent stake in the airlines, estimated to cost Rs 1,500 crore, and how their involvement affect the board structure.
Meanwhile, the industry ministry is working on a package for giving more incentives to the foreign investors like including forex broking in the non-banking financial companies' activities, to be unveiled soon.
Officials point out that the list of automatic approvals up to 74 per cent foreign equity would also be enlarged to include more areas, especially the hi-tech sector. "The idea is to cut down procedural hassles so that foreign investors interested in bringing in technology can do so quickly," officials said.
Though the FIPB has not chalked out a contingency plan to overcome the effect of the sanctions imposed by the US and others it has become "more assertive".
Industry ministry officials said, "Such acts (like the Tata proposal) will send positive signals to foreign investors that India is ready to make life easier for them by slashing procedural hassles".
The core group of the FIPB is to meet soon to take stock of the situation. Earlier this month the core group met to discuss the prospective fall-out of the sanctions and the necessary steps which are needed to be taken, especially aids coming to the social and infrastructural sectors. According to government estimates, foreign aids in social sectors amount to approximately $2.5 billion a year.
What is worrying government officials a little bit is that till March the country has received $3.2 billion of foreign direct investment _- a figure which is much lower than the announced figure of $10 billion by former finance minister P Chidambaram.
