Govt to allow 100% FDI in telecom; open up 13 sectors
16 Jul 2013
The union cabinet today decided to allow 100 per cent foreign ownership in telecom sector and raise the cap on foreign direct investment (FDI) in defence production to 49 per cent from the existing 26 per cent, as it opened up 13 sectors, including broadcasting and publishing, for increased FDI.
A meeting of senior cabinet ministers chaired by Prime Minister Manmohan Singh also approved an increase in FDI cap in defence production to 49 per cent from the existing 26 per cent.
Defence minister A K Antony had earlier opposed the move to hike FDI in defence production, saying it would disadvantage domestic production.
The approval for 100 per cent FDI in telecom sector, which currently has an FDI cap of 74 per cent, will have to come via the Foreign Investment Promotion Board if it crosses 49 per cent, sources said.
FDI in defence sector will also need to be approved by the cabinet committee on security over a threshold, according to decisions taken at the meeting.
The move to hike FDI limits across sectors is intended to ensure the inflow of badly needed foreign exchange that would relieve the rupee and help tackle the issue of high current account deficit, which is estimated to have risen to a record 4.8 per cent of GDP in 2012-13.
The decisions will now go to the cabinet.
A committee headed by Arvind Mayaram, secretary in the Department of Economic Affairs of the finance ministry, has recommended an increase in FDI cap on several sectors, including FM radio, up linking news and current affairs; print media (news and current affairs), commodity exchanges, stock exchanges along with depositories and clearing corporation, power exchanges, petroleum and natural gas refining and insurance, defence production and private security agencies, where Indian ownership and control is essential.
In its recommendations to the Department of Industrial Policy and Promotion (DIPP), the panel said 51 per cent foreign investment in these sectors should be under Indian ownership and control.
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