Govt keen on hiking FDI limit in permitted sectors

Sectors such as FM radio and defence could see a further liberalisation of norms for foreign direct investment (FDI) as part of the government’s review of foreign investment regime

Written by Surabhi | New Delhi | Published:April 8, 2013 1:12 am

Sectors such as FM radio and defence could see a further liberalisation of norms for foreign direct investment (FDI) as part of the government’s review of foreign investment regime.

“The thinking is that a minimum of 49 per cent FDI should be allowed in all permitted sectors,” said a senior government official,pointing out that FM broadcasting and defence are the two main sectors where foreign investment limit is kept at 26 per cent.

The government is also keen on raising the foreign investment limit in insurance and pension to 49 per cent,the official said but pointed out that Bills for the move are currently under consideration with the Parliament. At present 26 per cent FDI is permitted in insurance.

But sector-specific caps for other sectors such as banking and telecom,where FDI is limited at 74 per cent is unlikely to be reviewed at present. “The limits are already quite adequate for these sectors and they are unlikely to be re-examined at this point,” the official said.

Finance Minister P Chidambaram has called for a comprehensive review of the existing caps on FDI as many of them are no longer in sync with present day requirements.

The move is expected to help finance the current account deficit that touched a record 6.7 per cent of the GDP in the third quarter of 2012-13.

Officials said a final decision would be taken in consultation with the department of industrial policy and promotion the nodal agency that formulates policies on FDI.

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