The UPA's restructuring bandwagon is continuing. Prime
Minister Manmohan Singh on Tuesday untied the foreign direct
investment (FDI) entrances in 13 sectors, a move that will
expectantly show to be the mandatory panacea for the ailing
financial system and the falling rupee. Sectors that saw recreation
contains petrol and natural gas, insurance, defense production and
basic and cellular services. The declaration was prepared after the
PM met his cabinet colleagues in the evening.
In the fundamental and cellular services, the existing limit of
74% has been elevated to 100%. Of this, up to 49% is throughout the
automatic road, while from 49% to 100% will be through the foreign
investment promotion board. The Centre also permitted FDI in
manufacture of state-of-the-art defense apparatus. "The
restriction of 26% FDI in defense production through finance
ministry's nod continues. The government strong-willed that any
proposal in front of 26% where the project carried in
state-of-the-art technology will be taken up by the cabinet
committee on security," commerce minister Anand Sharma
But Sharma was non-committal on the higher limit of the foreign
investments in state-of-the-art technologies, and said the defense
minister will more define the term, state-of-the-art, in due course
of time. In the insurance sector, from the present 26% FDI through
automatic route, the government has amplified the limit to 49% via
the similar way. This is theme to the approval of Parliament.
The FDI limit for civil aviation was gone unchanged at 49%.
Experts think there is a necessity for more transparency on other
fronts. Hemant Joshi, partner, Deloitte Haskins, said firms which
got to improve their share will promote in the small term, but to
have long-term FDI inflows, an obvious policy rule needs to be
formed. "There should be more clearness on mergers and
acquisitions, taxation and spectrum sharing," Joshi said.
"Foreign money will move toward when there is a business
chance. So policy constancy is a pre-requisite."
Sharma said, "No opinion was taken on unwinding FDI in
media, airports, Brownfield pharma and multi-brand retail. We will
turn up with explanations in multi-brand retail."
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