NEW DELHI: The government will settle for composite foreign investment limits — including foreign direct investment, foreign institutional investment, non-resident investment and venture capital — in a move that will have a bearing on several sectors ranging from e-commerce and single-brand retail to insurance, commodity exchanges and asset reconstruction.
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The issue, which has been pending for several months, is expected to be finally decided by the Union Cabinet on Thursday with the department of industrial policy and promotion (DIPP), which is piloting the proposal, recommending grandfathering of earlier holding structures to comfort existing investors.
At present, in several sectors, there are sub-limits within the overall foreign investment ceiling. But, following the government go-ahead, any one set of investors can raise their stake up to the sectoral cap. The move is seen to be especially beneficial to foreign institutional investors in some of the sectors as they can increase their stake up to the sectoral limit. "The whole idea is to provide flexibility to investors," said an official. Sources said the move would help in removing ambiguity in application of sectoral caps, conditions and approval requirements in different sectors.
The ministry has proposed a composite foreign investment cap in sectors including agriculture, tea, mining, broadcasting, media, airports, retail, e-commerce, asset reconstruction companies, banking, commodity exchanges and insurance.
Over the past 14 months, the government has initiated several steps to improve the rules related to foreign investment, including allowing overseas flows into hitherto closed sectors such as railways, while increasing the limits for defence and insurance, two areas of special interest to investors. Rules have also been eased for sectors such as construction and efforts are underway to clearly stipulate the rules for Indian manufacturers to enter into the e-commerce arena.
www.sevagiri.com
The issue, which has been pending for several months, is expected to be finally decided by the Union Cabinet on Thursday with the department of industrial policy and promotion (DIPP), which is piloting the proposal, recommending grandfathering of earlier holding structures to comfort existing investors.
At present, in several sectors, there are sub-limits within the overall foreign investment ceiling. But, following the government go-ahead, any one set of investors can raise their stake up to the sectoral cap. The move is seen to be especially beneficial to foreign institutional investors in some of the sectors as they can increase their stake up to the sectoral limit. "The whole idea is to provide flexibility to investors," said an official. Sources said the move would help in removing ambiguity in application of sectoral caps, conditions and approval requirements in different sectors.
The ministry has proposed a composite foreign investment cap in sectors including agriculture, tea, mining, broadcasting, media, airports, retail, e-commerce, asset reconstruction companies, banking, commodity exchanges and insurance.
Over the past 14 months, the government has initiated several steps to improve the rules related to foreign investment, including allowing overseas flows into hitherto closed sectors such as railways, while increasing the limits for defence and insurance, two areas of special interest to investors. Rules have also been eased for sectors such as construction and efforts are underway to clearly stipulate the rules for Indian manufacturers to enter into the e-commerce arena.
Source - TOI
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