Discussions underway to liberalise FDI policy: FM

The govt said discussions are in progress to further liberalise foreign direct investment policies.

In the back drop of a sharp fall in FDI inflows and its impact on the country’s current account deficit,the government said discussions are in progress to further liberalise foreign direct investment policies.

Foreign direct investment (FDI) during April-December this fiscal declined by 23 per cent to USD 16 billion from USD 20.8 billion in the same period last year.

The industry ministry is in the process of evaluating the comments,which it has received on its discussion paper on liberalising FDI in multi-brand retail and defence sector.

At present,FDI is not permitted in multi-brand retail and only 26 per cent is allowed in defence manufacturing.

“Discussions are underway to further liberalise the FDI policy,” Finance Minister Pranab Mukherjee said today during his presentation of the Budget 2011-12.

Mukherjee said that to make FDI policy more user-friendly,all prior regulations and guidelines have been consolidated into one comprehensive document,which is reviewed every six months.

Global retailers like Walmart,Carrefour,Tesco and Metro have shown keen interest to enter the multi-brand sector and said it would help in containing food inflation,besides creating thousands of new jobs.

Story continues below this ad

In the paper on FDI in defence,the industry ministry had favoured 75 per cent foreign investment. However,the ministry of defence is known to have opposed increasing the FDI cap beyond the existing 26 per cent level.

India”s current account deficit (CAD),representing the difference of inflows and outflows of foreign exchange barring capital movements,surged 72 per cent to USD 15.8 billion in the July-September quarter over USD 9.2 billion in the same period last year due to higher imports.