Govt. May Review FDI Norms Soon

May 4, 2007	(Be the first to rate this story!)  Loading ...
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The government is considering modifying norms for foreign direct investment (FDI) in India. It would be done by bringing both direct and indirect overseas investment together to determine the total FDI within a company. It would help to check out whether a company is following the FDI limits in its area of operations. The decision has come after the Hutch – Vodafone issue.

The shift is likely to bring significant changes in foreign investment caps in investment sectors including telecom, retail, and aviation.

Nearly all issues surrounding direct and indirect holding have been reviewed on the advice of Foreign Investment Promotion Board (FIPB). The view that emerged during the review led the government to take up such a stand. Other modifications those are likely to put soon on the course are varied in nature where the foreign investors may get the permission to pick stake in commodity exchanges and change rules and limitations for aviation, petroleum and retail.

The government may relax the FDI norms in Asset Reconstruction Companies, where the cap currently stands at 49% subject to approval by the FIPB. As far as banking sector is concerned, the cap on voting rights is likely to undergo a change for good.

In the petroleum sector, the review would include a dilution of condition that 26% of the equity must be divested in favor of Indian conglomerates in five years.

If incorporated, these changes will certainly bring about the desired change in the FDI scenario and provide the much required push to the inflow within the country.

News Published Under:   Foreign Direct Investment in India |

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