Govt revises FDI norms

OUR BUREAU

Cash route New Delhi, April 6: The government today came out with revised consolidated guidelines on FDI in a bid to further simplify the foreign investment regime. The guidelines incorporated changes with regard to inflows in multi-brand retail and allowing Pakistan nationals and companies to invest in the country. It has also included policy changes in sectors such as single-brand retail, asset reconstruction companies (ARCs), power exchanges, civil aviation, broadcasting and non-banking financial companies. The government made these changes in the sixth edition of the consolidated FDI policy circular, a ready reckoner on foreign investment related regulations that is effective from April 5. Last year, amid opposition from some of its key allies and state governments, the Centre permitted 51 per cent FDI in multi-brand retail. The government also allowed foreign airlines to pick up a 49 per cent stake in domestic carriers. The FDI cap in various services of the broadcasting sector has been raised to 74 per cent. The foreign investment ceiling in ARCs has also been increased to 74 per cent from 49 per cent. Moreover, the total shareholding of an individual FII in an ARC should not exceed 10 per cent of the total paid-up capital. The government has also permitted foreign investment of up to 49 per cent in power trading exchanges. Review pitch Finance minister P. Chidambaram today pitched for a relook at the FDI ceiling in various sectors as they were fixed long ago. "We (should) look at each FDI cap. If the cap is serving a purpose, we should continue with the cap. If the cap is no longer serving the purpose, we should either relax the cap or remove the cap," he said. The FDI caps were laid down historically at different points of time, he said, adding "we are now into the 22nd year of liberalisation. These caps must be looked into again". Chidambaram said the Reserve Bank was likely to come out with its paper on FDI in two weeks.